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53% Of Canadians On Brink Of Insolvency

53% of Canadians are on the verge of insolvency and are $200 or less away from not being able to pay their monthly bills and obligations, while 25% took on more debt during the pandemic, according to a new survey by MNP.

The news comes as Canada's MNP consumer debt index hits a five-year high, and is a 10-point jump from a December survey, according to Bloomberg.

"The anxiety Canadians are feeling about making ends meet - or already unable to do so - tells us we may eventually see an avalanche of households falling behind on payments or defaulting on loans, mortgages, car payments or credit cards," said MNP president, Grant Bazian, in a Thursday report, which noted that government support programs which were meant to be temporary have alleviated the pain to some degree.

Households may have tried to save more and spend less amid the pandemic, and - to be fair - some have been very successful at doing just that. However, there are others who have taken on more debt due to job loss, wage reductions or desperately trying to keep small businesses afloat.

According to MNP, a quarter of Canadians took on more debt amid the pandemic. Among respondents, 20 per cent said they used savings to pay bills, 14 per cent used credit cards, seven per cent used a line of credit, while three per cent took out a bank loan or deferred mortgage payments, respectively. -Bloomberg

"Those taking on more debt are becoming increasingly vulnerable to interest rate increases in the future. They might find that their debt becomes unaffordable when that happens," Bazian wrote.

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