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Almost 50 percent of Canadians are in high amounts of debt, according to a new study that observes “high-leveraged” households ahead of the forthcoming interest rate decision by the Bank of Canada.
A staggering 47 percent of respondents to a survey by the Calgary-based insolvency firm MNP say they “don’t expect to be able to cover basic living expenses over the next year” without increasing the amount of debt that they’re in, according to Bloomberg.
When it came to spending money, Canadians again were in a tough position, as 48 percent of respondents said they had less than $200 remaining at month’s end after covering all living expenses and debt payments—an increase of four percent compared to the previous survey conducted in June.
Respondents also said that they had only $557 left for themselves after paying their bills and expenses, a whopping $142 less than the survey conducted in June.
“Household debt has eased marginally and the current holding pattern on interest rates may be giving Canadians a sense of optimism about their finances,” said MNP LTD president Grant Bazianin in a release Monday. “Still, the fact remains that many are drowning in debt and most don’t have a clear path to repayment.”
The survey also shows that that 70 percent of respondents weren’t confident about being able to afford an unexpected setback such as a death in the family, unemployment, or divorce.
“Unexpected expenses can plague people regardless of age or income but they’re most devastating for people who already have a large amount of debt,” Bazian said. “Our research shows that most households do not have enough cash for inevitable life events like car repair.”
The MNP survey of 2,002 Canadians was compiled by Ipsos from Sept. 4 to Sept. 9. MNP said the results are accurate within 2.5 percentage points, 19 times out of 20.