53 percent of Canadians just $200 away from insolvency, 31 percent can't pay bills: survey

A new Ipsos survey conducted for MNP suggests that 31 percent of Canadians aren't earning enough to cover their bills.

Respondents said that their incomes aren't covering bills and debt payments, with 53 percent of respondents saying that they are $200 away from insolvency.

The survey, of 2,000 Canadians, was conducted between March 9 and 15, taking place just a week before the Bank of Canada raised its policy rate in an effort to curb inflation that has already hit Canadians' pockets hard.

The survey shows that 52 percent of respondents were already feeling the effects of high interest rates.

"Among Canadians who say they're planning to renew their mortgage in the next 12 months, 91 per cent said they're planning to be more careful about how they spend money, compared to 81 percent among the broader population."

The central bank's rate ike will have an effect on housing markets, said Grant Bazian, president of MNP Ltd. in a press release.

"Those who own a home or who plan to renew their mortgage are at a higher risk when it comes to being unable to absorb higher interest rates. They will be facing higher monthly payments that could be dramatic. We are talking hundreds of dollars more per month that they hadn’t initially planned for. And with the increasing costs of food, gas and everything else, it is a perfect storm for some households that were already stretched to the max," he said.

MNP reports that: "A quarter (25%) of Canadians say they have taken on more debt because of the pandemic. This includes using credit cards (14%), using a line of credit (7%), taking out a bank loan (3%), or deferring mortgage payments (3%). One in five (20%) has also reported raiding their emergency savings to pay their bills."

“Those taking on more debt are becoming increasingly vulnerable to interest rate increases in the future. They may find their debt rapidly becoming unaffordable when those invariably happen,” explained Bazian. "... Unfortunately, using credit is a reflex for many Canadians. For those concerned about the mid- to long-term consequences, it is probably a good time to start thinking of debt as a trap, rather than the solution," Bazian said.