Impact of interest rates most troubling to Manitobans: poll

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This article was published 23/10/2017 (2905 days ago), so information in it may no longer be current.

Nearly half of Manitoba and Saskatchewan residents say they’re worried about the impact of rising interest rates, with 43 per cent fearing they’ll be in financial trouble if rates climb much higher, according to the results of a new poll by MNP Ltd.

In its latest Consumer Debt Index report released on Monday, the insolvency firm said the 49 per cent of Manitoba/Saskatchewan residents said they’re worried about the impact of rising interest rates on their financial situation. That’s the highest percentage among the provinces.

More than one in three (36 per cent) also said they’re already feeling the effects of higher interest rates, and 72 per cent said they’ll be more careful about how they spend their money going forward.

“I think there are a lot of people today who are financing a lifestyle they can’t really afford.”–Brad Milne, MNP

“After years of being warned that borrowing costs would eventually rise, debt-burdened Manitoba and Saskatchewan residents may now be facing a reckoning,” MNP said in a written statement .

“It’s clear that people are nowhere near prepared for a higher-rate environment,” added Gord Neudorf, a licensed insolvency trustee with the firm’s Winnipeg office. “The good news is that there seems to be at least the acknowledgement now that rates are going to climb, which might make people reassess their spending habits.”

Brad Milne, a licensed insolvency trustee with the firm’s Brandon office, said interest rates were low for so long and access to credit had become so easy that a lot of people probably hadn’t given much thought to how they were going to service their debt if interest rates did start to rise.

Further exacerbating the problem is that in recent years, Milne said he has noticed a growing number of Manitobans have been taking our home-equity loans as a way of accessing more money.

“They have already leveraged the equity in their home, so that cushion is not there any more,” he added.

The best advice he has for people who are worried about their debt load is to review their budget to see if there are ways to cut down on their spending. If there is, use the savings to start paying down their higher-interest-rate loans, such as credit-card debt.

If they can’t come up with a solution on their own, Milne said they should consider talking to a licensed insolvency trustee. He noted many of them will provide a free assessment of a person’s financial situation.

“I do meet with lots of people where we say that if you dined out less, or if you take your lunch to work, or if you could tighten up over here, you might have more money over there,” he added.

“I think there are a lot of people today who are financing a lifestyle they can’t really afford. So if you revisit some of these things you might have room in your budget (to start paying down debt) if you just tighten up (spending) a little bit.”

The Consumer Debt Index poll, which was conducted by Ipsos, measures Canadians’ attitudes about their consumer debt and their perception of their ability to meet their monthly payment obligations.

MNP Ltd. said the survey found millennials are the more likely to be feeling the effects of interest-rate increases than Generation X or baby boomer Canadians. It said 38 per cent of millennials said they were afraid rising interest rates could push them towards bankruptcy, versus 30 per cent for Gen Xers and 18 per cent for boomers.

Lower-income-earning Canadians are the most concerned about rising interest rates, it added.

murray.mcneill@freepress.mb.ca