It appears Canadians are at it again. A pair of new reports show debt is on the rise once more.
The latest figures from Statistics Canada put the household debt-to-income level at nearly 176% for the third quarter. That is up from 175.4% in Q2, and a 1.2% rate of growth on an annualized basis. Wages grew by just 0.9%. Debt service hit its highest level ever in Q3, at just shy of 15%. National net worth up by 0.1%
A corresponding report prepared by the credit tracking service Equifax shows the bulk of Canadians’ debt is the result of mortgages.
According to Equifax Canadians owe a total of nearly $2.0 billion in consumer credit. More than $1.3 billion of that is for mortgages, an increase of 4.5% over last year. Non-mortgage debt is up by 3.2%, year-over-year, which is the slowest rate of increase since 2016.
While Canadians appear to be getting their spending under control, the mortgage component of the figures will likely remain a continued concern for policy makers. Bank of Canada governor Stephen Poloz continues to mark the high level of indebtedness as the key, domestic vulnerability in the Canadian economy. It remains one of his main arguments for not lowering interest rates.
The Equifax report supports some of those concerns. While delinquency rates are remarkably low in Canada, they are on the rise. The number of consumers who are 90 days, or more, overdue on their non-mortgage payments is just 1.15%, but that is an increase of 10%. Mortgage delinquencies stand at a very modest 0.18%. But is an increase of nearly 7.0% over last year.
Equifax points out that an increase in consumer bankruptcies and proposals is masking a bigger problem with delinquencies.