Canadian Household Debt Growing Rapidly

Canadian Household Debt Growing Rapidly

Study: Canadian consumer debt hits $26,768, highest in two years

Toronto - According to a report released Wednesday, Canadian consumer debt grew at the fastest pace since the fourth quarter of 2010. The study found that non-mortgage debt increased 4.6 percent year-over-year in the third quarter to an average of $26,768.

Bank of Canada Governor Mark Carney has been warning households of its growing debt rate and officials are continuing to caution that household spending levels are starting to get out of control. Despite consistent warnings, the consumer’s total debt increased at its greatest rate in two years.

Quarterly analysis published Wednesday by TransUnion found that consumer debt loads have soared 400 percent over the past five years faster than inflation. The report established that while inflation has risen seven percent since 2007, total consumer debt jumped 37 percent.

The increase in total consumer debt has been prevalent throughout Canada, but the most notable provinces with the largest increases are New Brunswick (9.49 percent), Prince Edward Island (8.25 percent) and Newfoundland and Labrador (7.83 percent).

However, four provinces are leading the rest of Canada with total non-mortgage consumer debt in the third quarter of this year: British Columbia ($38,837), Alberta ($33,688), Ontario ($25,937) and Quebec ($19,174).

The four biggest factors in contributing to consumer debt are lines of credit ($34,050), installment loans ($22,849), auto captives ($19,228) and credit cards ($3,573).

"At this time last year, we were encouraged to see consumer total debt levels remain relatively stagnant for three consecutive quarters," said Thomas Higgins, TransUnion's vice president of analytics and decision services, in a press release.

"One year later, it appears we have reversed course as consumer total debt has increased for three straight quarters, including the largest jump in nearly two years this past quarter. While delinquency levels remain about the same or lower than they were one year ago, it should be noted that in the past five years debt levels have now increased 400% more than the rate of inflation."

Higgins noted that despite the high debt levels, Canadians across the country have done a good job at maintaining low delinquency rates. “It should be noted that many consumers are taking advantage of the low interest rate environment. Just five years ago, interest rates were significantly higher than they are today."

These statistics do not include the $17,000 that each Canadian shares in the national debt of nearly $600 billion.

VIA : DIGITAL JOURNAL