Burdened by debt, most Canadians believe interest rate cuts will provide little to no relief

July 18, 2024 — Half of Canadians say interest rate hikes have negatively impacted their debt loads and a similar proportion say they don’t expect future cuts to provide relief, suggesting interest rates have taken a long-lasting toll on Canadians’ financial well-being.

In a new CPA Canada and BDO Debt Solutions survey conducted shortly after the Bank of Canada cut interest rates for the first time in four years in June, seven-in-10 respondents said the move had no impact on their financial outlook.

Looking back at the Bank of Canada’s rate hikes from March 2022 through July 2023, 48 per cent of survey respondents reported negative impacts to their debt loads. The group who reported they were most affected by the increases were Canadians between the ages of 35 to 54 (58%), while those aged 55+ (57%) said there was no impact.

To what extent have the interest rate increases of the last few years (2022-2023) impacted your debt load?

“These results suggest lasting damage to consumer finances from years of inflation alongside rate hikes,” says David-Alexandre Brassard, chief economist at CPA Canada. “There will be ongoing consequences for the economy, even as the Bank of Canada lowers interest rates.”

With another Bank of Canada rate announcement just around the corner, a majority of Canadians (52%) believe continued interest rate cuts won’t go far enough to reduce their financial strain.

If interest rates continue to decrease over the next year, how would it impact your debt load?

Nancy Snedden, Licensed Insolvency Trustee and President at BDO Debt Solutions, expresses her concern over Canadians' overwhelming debt:

Survey participants ranked paying down debt and increasing savings as their top priorities in a decreasing rate environment (both 28%). Paying down debt was an especially high priority among those aged 35-54 (35%). Those under 55 were also significantly more likely to focus on making a home purchase (11%).

If interest rates continue decreasing, what will be your top financial focus?

Survey methodology

Leger conducted the Impact of Interest Rates on Canadians’ Personal Finances OMNIbus online survey from June 28 to July 2, among 1,521 randomly selected Canadians aged 18 and over.

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For more survey results, information or to request an interview, contact:

Cindy MacDonald
[email protected]
(902) 536-0635