Latest MNP debt index report shows BC residents need interest rates to fall

Photo: The Canadian Press

British Columbians are impatiently waiting for interest rates to drop.

According to the latest MNP Consumer Debt Index, three in five B.C. residents say they “desperately” need interest rates to go down. Ipsos, which conducts the financial survey on behalf of MNP, found 48% of respondents believe interest rates may not decline quickly enough to provide the financial relief they require.

The report was released before Bank of Canada cut its key rate on Wednesday, but the cost of borrowing will take time to drop.

“British Columbians may have been wishing for a more substantial interest rate cut or a quicker impact from the reduction, which might have been disheartening for some,” MNP insolvency trustee Linda Paul said in a press release. “With the cost of many basic necessities still high, many have not experienced the significant drop in their monthly expenditures needed to ease their financial stress.”

The survey found 63% of B.C. residents said the recent high interest rates have had a negative impact on their household finances, and 43% said they are still concerned about their ability to repay debts even if interest rates do fall.

Nearly half of those surveyed—47%—are $200 or less away from failing to meet all their financial obligations, and that includes 24% who say they already can’t cover their bills and debt payments.

“Often, people who are struggling with debt feel overwhelmed by guilt and embarrassment due to the stigma around this issue,” Paul said. “What’s important to recognize is that debt is not solely the result of the failings of the individual; many different external factors can contribute to unmanageable debt levels.

“These can include unexpected changes in income, job loss, high costs of servicing debt—in particular credit cards—increasing prices of basic necessities, rising mortgage and rental payments, and emergency expenses like car or home repairs.”