A credit cards illustration is shown in a Thursday, Oct. 6, 2022 file photo. Consumer insolvencies were up 23.5 per cent in the second quarter compared with last year. THE CANADIAN PRESS/Andrew Vaughan

By The Canadian Press

INSOLVENCIES

Consumer and business insolvencies rising under weight of higher interest rates

Aug 3, 2023 | 9:51 AM

The Office of the Superintendent of Bankruptcy says both consumer and business insolvencies rose significantly in the second quarter amid heightened interest rates.

The agency said the 31,224 consumer insolvencies in the April to June period were up 23.5 per cent compared with the same period last year, while business insolvencies rose 36.9 per cent to 1,090.

The agency says that for June, total insolvencies were up 19.6 per cent compared with June 2022, but down 2.8 per cent from May.

Total insolvencies for the 12-month period ending June 30 were 116,653, up 23.2 per cent from the previous period.

The Canadian Association of Insolvency and Restructuring Professionals says interest rate hikes are increasing stress on businesses as they face higher costs and weakening consumer demand.

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The association says consumer insolvencies are rising steadily and reaching levels comparable to pre-pandemic, and it expects they will surpass pre-pandemic averages later this year.