Canadians; CRAZY in love with debt

As a collection agency with offices in Edmonton, Calgary and the GTA we recognize that the vast majority of consumers we inevitably end up dealing with are good people, with good intentions, that have now simply arrived at the tipping point of having to either try to continue to rob Peter to pay Paul or, in the alternative, to make some hard choices in monthly budgeting in order to honour their outstanding financial obligations.

On our note above its no surprise to see that the amount Canadians owe relative to their income ticked higher in third quarter of 2018!

Statistics Canada says household credit market debt as a proportion of disposable income was 177.5 per cent in the third quarter on a seasonally-adjusted basis. That compared with 177.4 per cent in the second quarter.

In other words, Canadians owed nearly $1.78 in credit market debt, which includes consumer credit and mortgage and non-mortgage loans, for every dollar of household disposable income in the third quarter.

However, total credit market borrowing slowed for the third consecutive quarter as households borrowed $18.3 billion, down from $20.0 billion in the previous quarter.

Mortgages posted a third consecutive quarterly decline as they decreased by $1.2 billion. Demand for consumer credit also fell by $500 million, while non-mortgage loans decreased by $100 million.

The combination of rising interest rates and real wage growth remaining tepid, and governments at all levels seizing upon every possible opportunity to grow our already “global leading” tax burdens we suspect credit market debt as a proportion of disposable income will continue to creep higher through 2019.  Fortunately for the indebted the Bank of Canada announced today a further hold on rates “for now”.