Canadian Consumer Debt Continues to Climb
It seems we just can’t get over debt here in Canada. Or rather, we can’t stop piling it on. Just when the numbers start to show that we’re making headway on it, and that we’ve stemmed the spending, another one comes out saying that we’ve once again gotten ourselves in far too deep. That’s just what’s happened recently, as TransUnion released stats showing that Canada’s debts have once again soared higher than ever before.
That latest stats have come in, and they’re not good. They show:
- Non-mortgage debt has increased 4.6 per cent when compared with data from last year – rising to $26,768 per person.
- Auto loans were once again the driving force of the increase in debt, as these loans increased by 11 per cent year-over-year, to $19,228.
- Installment loans increased by 2.3 per cent when compared with the third quarter of last year, hitting the $22,849 mark.
Thomas Higgins, vice-president of analytics and decision services at TransUnion, says that the numbers are maybe even more alarming than Canadians realize.
“It’s been almost two years and it’s the largest year-over-year increase we’ve had and I think it’s the largest quarterly increase we’ve had during that time period as well,” he says. “Debt’ outpacing us and continues to outpace us, so at some point there’s going to be a reconciliation.”
He points to the fact that Canadian debt loads have jumped by a whopping 400 per cent more than the rate of inflation. That’s based on the Consumer Price Index showing inflation at 9 per cent; and consumer debt rising over 37 per cent.
But he says, there’s reason people are taking on more car loans today, whether it’s good for their overall financial picture or not.
“During the recession people held off on buying the new car, they refinanced the lease or continued with what they had longer than they would have,” he says.
He believes that people are more comfortable borrowing now because the crisis talk from around the globe and the U.S. has died down somewhat recently. And with jobs looking fairly stable in Canada, he thinks that people see themselves in a much better position than they actually are.
The news wasn’t all bad though. The delinquency rate on all loans across the board still remained low, and are still at the pre-recession levels they fell to this past summer.
The fact that we’re simply still making good on those loans we can’t afford may not be enough though. We’re officially in the Christmas shopping season now, and that’s sure to only force our finances to take another hit. And those repercussions Mr. Higgins spoke of might come sooner rather than later.
“Hopefully it’s not drastic, and hopefully it doesn’t hit everybody,” he says. “But there’s going to be a correction somehow along the way.”