New data showed more households on edge even as some found modest breathing room
Canadians entered 2026 expecting their household finances to come under renewed strain, with fresh polling pointing to higher living costs, weaker growth and intensifying pressure on already stretched borrowers.
According to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos, 71% of respondents expect the cost of living to worsen this year, while 59% anticipates a weaker economy and the same share foresees deteriorating housing affordability.
A majority also expects higher taxes, rising poverty and deeper government deficits, underscoring a sense that “most aspects of daily life” would move in the wrong direction in 2026, the survey showed.
“There is a widespread sense that household finances will come under increasing pressure, fueling heightened anxiety about economic security in the year ahead,” said Grant Bazian, president of MNP LTD.
“Canadians expect most aspects of daily life to worsen rather than improve in 2026.”
Pessimism met a rare uptick in the Index itself, which edged up one point to 87 in the December reading, the first time it has risen in that month since the measure began.
Two in five Canadians (41%) said they are within $200 of not being able to pay their bills each month, down seven points from the prior quarter, with average month‑end cash left over up to $907.
Still, fewer than half reported having six months of emergency savings, leaving many exposed to shocks.
“Despite pessimism about 2026, there are signs of cautious optimism, breaking from the Index’s usual seasonal decline and suggesting that some households are entering the new year with slightly more financial breathing room,” said Bazian.
Fight, flight and a frozen middle
Nearly three in five (59%) described a “fight” response – tightening budgets, consolidating debt or seeking professional advice – while roughly one‑third took a “flight” approach, avoiding bills, difficult conversations or leaning more on credit to cover essentials.
Fifteen percent felt “frozen,” unsure how to start addressing their situation.
“Many Canadians are in financial flight mode, which can create a false sense of short‑term relief,” said Bazian.
“Avoiding bills and conversations about finances or relying more heavily on credit can make financial stress feel manageable in the moment, but those behaviours often allow problems to grow quietly in the background.”
Younger adults aged 18–34, and lower‑income households under $40,000, are more likely to report flight or paralysis, echoing past MNP polling that found financial anxiety and paycheque‑to‑paycheque living most acute among these groups.
Rates off the peak but pressure stays high
The Bank of Canada held its policy rate at 2.25% in December after a series of cuts in 2025, keeping borrowing costs at the lower end of its estimated neutral range. Still, nearly two‑thirds of Canadians in the MNP survey said they urgently nee further rate relief, and close to half remains worried about their ability to repay debt even if borrowing costs eased.
Canada’s latest jobs report appears to give the Bank of Canada more reason to wait rather than rush into rate hikes, and for mortgage borrowers, that likely means a longer stretch of stability on variable and HELOC costs rather than an abrupt turn higher.https://t.co/dUZsD6hdfg
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 9, 2026
Those findings aligned with earlier MNP Consumer Debt Index results that showed 64% of Canadians desperately needed interest rates to drop and many felt their lives were in a financial holding pattern while they waited for clarity.
“Even where Canadians see some improvement in their own debt situation, confidence about the year ahead remains fragile, particularly among those carrying high levels of debt,” said Bazian.
“For these households, ongoing affordability challenges and borrowing costs leave little room for error as they head into 2026.”
Help on offer, but stigma persists
Despite the stress, relatively few respondents said they have spoken with a professional. Just over one in 10 reported seeking advice from a financial expert, even as regulators continue to warn about unregulated debt‑relief schemes and urged borrowers to consult Licensed Insolvency Trustees.
“Too many Canadians are trying to navigate financial challenges in isolation,” said Bazian.
“There are government‑regulated professionals available to help indebted Canadians understand debt‑relief options, make informed decisions, and prevent financial stress from escalating.”
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