The latest MNP Consumer Debt Index has revealed a number of worrying trends for Ontarian homeowners. The report, which is conducted by Ipsos on behalf of MNP Ltd every quarter, measures Canadians’ attitudes toward their consumer debt as well as gauging their ability to afford bills, handle unexpected expenses and interest rate changes without becoming insolvent. It is a great way to estimate financial pressure for Canadians. This recent report is the seventeenth edition of the MNP Consumer Debt Index and contains information sourced in June 2021 from a survey of 2,002 Canadian adults. 

The report shows that Ontarians are more stressed out about money, debt and affordability and those feelings are increasing with the highest self-reported insolvency rate in the report’s history. 

It would be easy to blame the pandemic but the reality is more sobering than that. 

According to the report, 31% of Ontarians who own a home say they are house poor which means that after paying home-related bills, there is little money left for other things. Approximately two million homeowners in Ontario are susceptible to financial disruptions such as interest rate changes or job-related disruptions. And 18% of homeowners say they regret the amount of debt they took on to purchase their home. 

This is in part driven by the sky-rocketing prices in real estate, particularly in heavy metropolitan regions such as the GTA. Low-interest rates have also pushed people into the real estate market with 58% of people from the report saying they took advantage of the low-interest rates during the pandemic in order to purchase a home that would not have normally fit in their budget. 

With this, 46% of Ontarians were not confident they would be able to cover all of their expenses in the next 12 months without using credit. This metric has reached its highest point since December 2019. 

However, perhaps due to the pandemic, 34% of Ontarians say they plan to spend more money on normal things such as dining, entertainment and travel in the coming months as the economy reopens. This is understandable after the previous year and a half we’ve all spent inside and unsure during these times. 

Almost a third of Ontarians felt that the pandemic has worsened their debt (33%) or created a larger debt burden for either themselves or their family (38%). Still, many are rushing to shopping malls and restaurants as pandemic restrictions begin to lift. 

A Toronto-based MNP trustee, Carlyle Newberry-Mitchel stated that “It is understandable many are seeking post-pandemic indulgences, but the ability to do so is by no means universal. Those who went into lockdown already deeply indebted and then experienced prolonged financial disruption are vulnerable right now.”

But cautions: “They should not rush to return to pre-pandemic spending habits.”

Debt isn’t something to be scared of but struggling Ontarians need to be cautious. Newberry-Mitchel continues “As life slowly gets back to normal, the money management behaviours influenced by the pandemic can help households positively reshape their financial futures. Spend less, save more, and make emergency funds a priority.”