Recent months have seen many Canadian households stretched thin during the COVID-19 pandemic as costs of living continue to rise across the country.
Results from a new survey suggest the impacts are taking a toll on Saskatchewan and Manitoba residents as the world is in year three of the pandemic.
A poll conducted by Ipsos on behalf of MNP LTD shows that 55 per cent of Saskatchewan and Manitoba people are concerned about the impact of rising interest rates when it comes to their financial situation.
According to the poll results, it’s the largest point increase amongst the provinces as Saskatchewan and Manitoba reported a nine-point jump from September.
The poll also determined that 56 per cent of residents from the two prairie provinces are more concerned about their ability to repay their debts than before and 49 per cent worry they will be in financial trouble if interest rates go up much more.
Thirty-eight per cent say rising rates could move them towards bankruptcy, more of any other province.
“It was shocking when the numbers came out to see those type of numbers hit at that level. But when I stepped back and started to think about it a little bit, we had a lot of other issues kind of underlining prior to COVID,” said Pamela Meger, a licensed insolvency trustee with MNP LTD in Regina.
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Meger discussed how the impacts began when oil prices decreased prior to the pandemic, which caused a ripple effect to other industries and created a downturn in the economy and resulted in some lost jobs.
She said once COVID-19 hit is when businesses and employees were even more affected.
“Many households are already finding it less affordable to feed their families or pay for things such as housing, and rising interest rates will mean additional debt servicing costs for households who have taken on credit to get by. Those that aren’t able to pay down their debt are the most vulnerable,” Meger suggested.
When it comes to affordability, poll participants said many areas of their day-to-day lives have become less affordable over the past year as price of goods and services continue to climb.
Fifty-four per cent of people said they find it less affordable to feed themselves or their family, 55 per cent find it more difficult to put money aside for savings and 42 per cent believe clothing and other household necessities are unaffordable.
Other areas addressed in the poll include transportation needs (45 per cent), housing (34 per cent) and putting money towards paying their debt down (39 per cent).
In addition, 49 per cent say between three to six of the listed areas have become less affordable, while 81 per cent say they will be more careful with how they spend their money with rising interest rates.
“There is a part in (the results) that said people didn’t really know what interest rate increases meant, so to me, it’s like, ‘Okay, this is a great opportunity that people are even realizing that maybe this will affect their family,'” Meger stated.
Twenty-seven per cent of participants feel they do not have a solid understanding of how interest rates will impact their financial situation.
Meger said it’s encouraging to see people start to make necessary adjustments, but she also wants people who are concerned about interest rate hikes to know there are options available if they want help with their situation or they want more information.
“Don’t hesitate to ask because it’s very complex and it’s very different for every family and for every individual,” she said.
“Let’s focus on a way we could help them through this time to make sure they’re the least affected as possible.”
The Bank of Canada’s next interest rate announcement is set for March 2.
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