Canadians cut spending, delay milestones, and brace for more pressure despite rate pause
About 14 million Canadians remain close to financial insolvency, with little to no ability to absorb an unexpected expense or disruption in income, according to MNP LTD.
Two in five Canadians (42 percent, -1 point) say they are $200 or less away from insolvency each month, and over one-quarter (27 percent, +1 point) already consider themselves financially insolvent.
The MNP Consumer Debt Index held steady at 88 points this quarter, but concerns about debt are intensifying.
Nearly half (46 percent, +3 points) say they regret the amount of debt they’ve taken on, while 44 percent (+2 points) are worried about their current debt levels.
More than one-third (36 percent) report feeling anxious or stressed about their financial situation.
Concerns about rising interest rates continue to weigh heavily on Canadians.
Although the Bank of Canada has paused rates twice this year, 41 percent (+3 points) say further increases could push them toward Bankruptcy.
Another 45 percent (+2 points) are worried about their ability to repay debt even if rates go down. Nearly two-thirds (64 percent, +1 point) say they desperately need rates to fall.
Despite this, fewer Canadians believe they will be able to cover all their living expenses in the next 12 months without taking on additional debt (54 percent, -4 points).
One-third (33 percent, +3 points) expect their debt situation to improve in a year, and 40 percent (+1 point) expect it will improve over five years. Thirteen percent anticipate it will worsen in both timeframes.
Many are making active changes.
Two in five Canadians (41 percent) have reduced discretionary spending. A third (33 percent) are increasing savings or building emergency funds, and over one-quarter (27 percent) are prioritizing debt repayment.
Nearly one in four (23 percent) are delaying life decisions such as buying a home, starting a family, or switching careers. Younger Canadians aged 18–34 are the most likely to delay these milestones (33 percent).
Households are also reporting small gains in monthly cash flow. The average amount left at month-end increased to $916, up $49 from last quarter.
This is the second-highest figure since tracking began in 2017.
The biggest increases were seen among Canadians aged 55 and older (+$84) and those in mid- to high-income brackets: households earning $60,000–$100,000 (+$260) and those earning over $100,000 (+$129).
Canadians’ net personal debt rating held relatively steady at 21 points (-1 point), continuing the recovery from a record low of 8 points in December 2024.
Still, many Canadians report stalled progress and persistent stress.
A quarter (26 percent) say they feel like they’re putting their life on hold, while 24 percent feel they are constantly dealing with one unexpected financial hit after another.
One-third (32 percent) say they are stuck living paycheque to paycheque. These challenges are more common among Canadians aged 18–34 (37 percent), those aged 35–54 (39 percent), and those earning under $40,000 (45 percent).
Young adults and lower-income households show the greatest vulnerability.
One-third (33 percent) of Canadians aged 18–34 say they feel stalled. Among households earning under $40,000, 30 percent say the same.
Stress levels are also highest in these groups — 45 percent of younger Canadians and 44 percent of those with lower incomes report feeling anxious or stressed about their financial situation.
Despite the pressures, only 32 percent of younger adults say they are managing their money cautiously, compared to 37 percent of Canadians overall.
“Canadians have not witnessed such economic uncertainty since the COVID-19 pandemic,” said Grant Bazian, president of MNP LTD.
He added that while perceptions have somewhat stabilized, many households feel stuck in a financial holding pattern, waiting for conditions to improve.
Bazian said those delaying major decisions and spending cautiously may still be struggling to get ahead, even after two interest rate pauses. “Persistent fears remain around interest rates,” he said.
For some households, he noted, the damage has already been done, with lingering anxieties about future challenges after years of rising costs, high rates, and drained savings.
Bazian encouraged those struggling with debt to speak with a Licensed Insolvency Trustee. “Whether you’re missing payments, dealing with collection calls, or just unsure of how to get back on track, Licensed Insolvency Trustees can help you understand your options,” he said.
He added that these professionals offer guidance in a judgment-free environment to help individuals assess their financial situation and consider available debt relief solutions.
He added that if financial stress is causing sleepless nights, it may be time to seek help. “Many people are facing the same struggles right now, and just reaching out can lift a huge weight off your shoulders. Getting advice early can make all the difference.”
MNP’s national team of Licensed Insolvency Trustees offers free consultations across Canada.
These federally regulated professionals can assist with all debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from collectors, and discharge individuals from debt.
