Pattie Lovett-Reid

Chief Financial Commentator, CTV

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There is an old adage, "You can't help someone who doesn't want to be helped." 

For years we have been talking about household debt levels in this country; and yet the latest MNP Consumer Debt Index suggests the number of Canadians who are concerned that they cannot make ends meet without going further into debt has reached it highest level in three years. 

Now, to be fair, you can in part blame this on the pandemic. Three-in-ten respondents said the pandemic has worsened their debt levels. I understand and appreciate this reality for those who have suffered financially through no fault of their own. There have been sectors hit hard such as retail, travel, tourism and of course hospitality. There is no question those who work in these sectors and others have seen household balance sheet destruction amid what’s clearly been a k-shaped recovery. The rich are getting richer and the poor are getting poorer. 

However, others I'm not as sympathetic toward. 

MNP noted that 57 per cent of respondents said they have taken advantage of low interest rates during the pandemic to make purchases they might not normally have. 

As well, as the economy reopens and pent-up demand is unleashed, "a significant proportion of Canadians appear to be ready to emerge from their bubbles and go straight into shopping malls, restaurants and airplanes to celebrate the pandemic wind down,” according to MNP Ltd. President Grant Bazian. 

Sadly, for many already living close to the margin, this will only lead to further debt accumulation and put those who struggle financially even further behind. 

And that's not all.

The 32 per cent who consider themselves to be "house poor" are possibly even more at risk. The real estate frenzy has gripped Canadians and in some cases caution was thrown to the wind. Indeed, 20 per cent of respondents said they regret how much debt they took on to buy their home. That’s not surprising when you consider that, overall, 34 per cent said that rising interest rates could push them toward bankruptcy. 

Despite years of reporting on this, I still find it difficult to comprehend how people continue to spend more than they earn and would buy a home with little contingency planning. Hear me loud and clear: rates will ultimately head higher.

The saddest part of this report, which is based on a survey by Ipsos of 2,002 Canadians in mid-June, is that the proportion who report they are already insolvent is at the highest since 2017. Thirty per cent said they are unable to meet their monthly expenses, while 45 per cent are not confident they'll be able to cover their living expenses in the next 12 months without spending on credit. 

As our economy heals I will continue to encourage Canadians to repair their personal balance sheets. It always comes down to save more, spend less and the savvy person will reach out for help if they can't do it alone