Winnipeg-
Manitobans are feeling the crunch of rising interest rates and increased costs of living with many concerned they don’t have enough to cover their bills and debts, findings from a new report suggest.
According to the latest MNP Consumer Debt Index, six in ten Manitoba and Saskatchewan residents say they are concerned about the impact rising interest rates have on their financial situation, and three in ten say they aren’t financially prepared to deal with a one percentage point rate increase.
“With the interest rate increase, what you see is more people struggling to service their debt because obviously, when you have an interest rate increase, you know, so too increases the cost of servicing your debts,” said Brad Milne, a licensed insolvency trustee and MNP partner.
The results come days after the Bank of Canada increased its key interest rate by .05 per cent to 1 per cent – the largest hike in more than 20 years. The central bank has warned this may not be the last hike of the year.
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“We’re kind of in a unique situation right now because while we’re experiencing the interest rate increases, we also are seeing fairly significant increases in our cost of living,” Milne said. “Gas prices are going up, our grocery expenses are increasing as well, so I think all consumers are facing a tighter cash crunch.”
The report shows Manitobans are also seeing less money left over at the end of the month. According to the MNP Consumer Debt Index, more than half of Manitoba and Saskatchewan residents surveyed in the report say they are $200 or less away from not being able to meet their financial obligations, while 34 per cent say they don’t make enough to cover their bills and debts.
Milne said this can also have an impact on Manitobans’ stress and anxiety.
“If you’re living paycheque to paycheque and you’re already seeing an increase in gas prices and your grocery bill is increasing, and now your cost to service debt is increasing with the interest rate increase – obviously it becomes that much more stressful, “he said.
“If you’re using credit to service your debt, you may find yourself in kind of an endless cycle of – the thing I hear quite often is robbing Peter to pay Paul,” he said.
He suggests Manitobans who are feeling financial stress should track their monthly income and spending to see where they can save money.
“A person may be surprised at where they can save some money and just get a little bit more financial freedom,” he said.
The findings in the report are based on the results of a survey of 2,000 Canadians conducted on behalf of MNP between March 9 to 15. The poll has a margin of error of plus or minus 2.5 percentage points, 19 times out of 20.