A recent report by CIBC World Markets clearly indicates that Canadians are ignoring those persistent warnings from the federal government about consumer debt levels. After steadily reducing debt loads since 2009, as of the third quarter of 2014 consumers are back to piling it back on with household debt jumping 4% from last year, growing at its fastest pace in nearly two years.
Click here for a full copy of the report from CIBC World Markets.
Part of the reason for the increase in debt (beyond the growing “gotta have it now” attitude of consumers) is that banks are happy to dole out more credit cards and increasing maximum limits, not to mention ramping up auto lending at a clip of 8% year over year.
With debt-to-income ratios stabilized and net worth positions at a record high Canadians are confidently digging a deeper hole since from such a perspective it’ll get easier to climb out of as time goes on.
With this report taking into consideration credit activity from July-Sept 2014 a lot has changed since then; the price of oil, Canada’s biggest export, is off by approximately 50%, the Canadian Loonie has devalued by approximately 12% and some of the optimism has started to fade from the Canadian housing market.
Perhaps we may be quickly approaching “last call”. If so, can someone else at the table pay the tab, I forgot my wallet.