Household debt reaches new high

by Steve Randall16 Mar 2017

Canada’s households borrowed $28.4 billion in the last three months of 2016, more than $9 billion more than in the third quarter.

The seasonally adjusted data from Statistics Canada reveals that mortgage borrowing was up $1.2 billion to $18.9 billion while non-mortgage borrowing was up $8.5 billion quarter-above-quarter to $9.5 billion.

The ratio of household debt to disposable income was 167 per cent - $1.67 of debt for every dollar of spare cash – while the rate of disposable income gains (1.1 per cent) was outpaced by the growth of the consumer credit market (1.2 per cent).

A separate report from Equifax Canada shows a combined consumer debt of $1.718 trillion in the fourth quarter of 2016, up 6 per cent year-over-year.

While 46 per cent of consumers are decreasing their debt, the 37 per cent that are increasing their borrowing are taking on larger debts. Mortgages aside, increases in the auto loans and instalment loans sectors are almost 8 per cent.

"Demand for credit is increasing in Ontario, New Brunswick and Nova Scotia," said Regina Malina, Senior Director of Data & Analytics at Equifax Canada. "It's too early to call it a trend, but there's also a renewed appetite for credit in Western Canada. All four provinces saw increased credit inquiries at the end of 2016."

Deliquencies have continued to rise in oil patch areas of Alberta, Saskatchewan and Newfoundland. Eastern and Western regions, largely in the credit card sector.

Equifax figures show that seniors’ debt has increased the most (6.1 per cent year-over-year) while those in the 36-45 age group have the lowest increase (1.8 per cent) along with younger millennials (1.9 per cent). Older millennials increased their debt by 2.7 per cent.

Overall, average debt in the fourth quarter of 2016 was up 3.1 per cent year-over-year Equifax says, to $22,113 nationwide.

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