Achi news desk-
Some Canadians are feeling a little more optimistic about their debt with the possibility of interest rate cuts on the horizon, MNP Ltd. said.
The company’s Consumer Debt Index metric showed a significant rebound in the first quarter of 2024 after 12 months of low scores, according to its latest report.
More than a quarter of Canadians say they see their current debt situation as better than a year ago.
Fewer Canadian households than last quarter, at 41 per cent, say they are worried about their current level of debt.
“Things are not as bad as they were: that is the main theme of the latest report,” said the president of the MNP, Grant Bazian, in the statement.
But despite the uptick in consumer sentiment, Canadian households are still feeling the pinch, he added, as more mortgage renewals emerge and the cost of living continues to rise.
Half of the respondents said they are concerned about what MNP calls “social squeeze,” meaning they worry about spending money on their lifestyle or social obligations.
“Overwhelmed and discouraged by how expensive it is to attend or participate in social events – be it birthdays, weddings, graduations or family celebrations – some may sink further into hardship because they cannot afford to participate,” he said. Bazian.
Fewer Canadians than before said they were worried about their ability to repay their debts, but almost half of respondents said they were $200 or less away from defaulting on all their financial obligations, a number that did not budge from the latest report.
The Bank of Canada looks set to begin cutting its key interest rate this year as inflation moderates significantly from its peaks.
The central bank’s steep rate hike campaign brought rates higher than they had been in years. As Canadians’ mortgages come up for renewal, they have faced significantly higher monthly payments on their homes, while rental costs have also increased.
Four years after the start of the COVID-19 pandemic, a third of Canadians said they were in worse financial shape compared to before the pandemic, especially among people with lower incomes and those aged 35-54, MNP said.
This report was first published by The Canadian Press on April 8, 2024.
