Canadian consumer debt concerns have eased as Ottawa provides more financial support to individuals and families during the COVID-19 pandemic.
While the financial picture for many Canadian households looked terrible last quarter, many have been kept afloat thanks to the current pandemic-related government support programs. After reaching a record low in early March, the MNP Consumer Debt Index has climbed three percentage points to 96, with increasing optimism among Canadians about their personal finances.
The quarterly poll, which is conducted by survey company Ipsos on behalf of MNP Ltd., found that Canadians feel more confident than ever about being able to cover their living expenses for the next 12 months without going further into debt.
The newfound optimism can also be seen in measures showing that fewer people regret the amount of debt they have taken on in life and are less concerned about their current level of debt. Over a quarter of Canadians surveyed perceive their debt situation to be better now than it was a year ago and more than a third believe that it is better now than it was five years ago.
With widespread store closures leaving less opportunity for spending and savings on gas and commuting costs because of working from home, Canadians now say they have more wiggle room in their household budgets each month. On average, after their bills and debt obligations have been paid, Canadians report having $148 more leftover at month end than they did in early March.
The number of Canadians who say they are $200 or less away from financial insolvency at month-end decreased six percentage points since early March to 43%. So far, government support, mortgage deferrals and the flexibility of creditors have contributed to a significant decline in insolvency filings since the COVID-19 pandemic began. In May, consumer bankruptcy filings declined 51% compared to the same month last year.
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