Nearly half of all Albertans are just $200 or less away from financial insolvency, a 13 percent-point increase from last quarter.
The report, from MNP Ltd., who conducted the poll on behalf of Ipsos, found that 32% of Albertans say they can’t cover all of their bills and debt payments.
The results come despite the recent interest-rate cut by the Bank of Canada, which dropped the key rate by a quarter of a percentage point in early June, from 5% to 4.75%.
MNP’s survey found that two-thirds of Alberta respondents (67%) indicated they “desperately” need interest rates to decrease. Nearly three in five (58%) expressed concern that interest rates may not fall quickly enough to provide necessary financial relief and that rates will need to go down “a lot” before their financial situation significantly improves.
Lindsay Burchill, a Calgary-based licensed insolvency trustee and vice-president of consumer insolvency for MNP Ltd., told the Calgary Herald that significantly more Albertans are on the verge of insolvency, and many feel pessimistic about their personal finances.
That financial pessimism has been fuelled by a red-hot rental market and inflation in Alberta that have outpaced national averages and cost-of-living increases, Burchill said.
“I think people have lost the elasticity in their budget — that ability to absorb any further shock — and now they’re really at a tipping point where they have to look at some professional options to deal with their debts and maintain their living costs,” she said.
She also said that any future drops to the interest rate would not reflect on the MNP’s next report.
“Someone who renewed their mortgage six months ago is not going to see a huge benefit from any drop that is going to happen in the coming months,” she said. “They’ve already locked into a higher rate, potentially, and that’s what they need to maintain to keep their home.
“Even if Bank of Canada interest rates drop, that’s not to say the inflation we’re seeing in food costs or everyday life are going to follow the same trend — and certainly not fast enough.”
