What Could Average Canadian Debt Mean to FIs Across the Board?

It can’t be denied that Canadian debt levels continue to skyrocket. Just about every news outlet from the CBC to Global has reported on this trend. Economists and even the Prime Minister has chimed.

Take a look at the infographic below produced by Equifax, according to an article released by Global News last, consumer debt is up in every single province: year http://globalnews.ca/news/1544506/infographic-debt-levels-jump-sharply-east-of-ontario/.  With the exception of Manitoba and Quebec, all provinces are seeing an average over $20,000.00.

The CBC released an article earlier this past summer that suggests that Canadians are continuing to rack up their household debt. The article looks at household debt which includes mortgages, lines of credit and credit card debt vs. consumer debt which is highlighted in the above infographic. The article sites a BMO annual debt report that resulted in the average debt of those surveyed as sitting at a staggering $92,699 which is $4,000 higher than the previous 4 year average: http://www.cbc.ca/news/business/canadian-households-are-racking-up-more-debt-poll-suggests-1.3146766.

What does this skyrocketing household debt mean to FIs across Canada? This in itself is a very complicated question with many variables that include performance in the capital markets (oil), interest rates, job growth, performance of the dollar and much, much more.

Economists from both BMO and RBC this last quarter called for rate cuts from the Bank of Canada citing signs of a faltering recovery http://www.bnn.ca/News/2015/7/8/Bank-of-Montreal-and-RBC-join-Bank-of-Canada-rate-cut-call.aspx. This occurred while an economist at TDCT went as far as to proclaim that Canada is in recession territory.

The top TD economist wasn’t alone in his sentiment according to this article in the BNN: http://www.bnn.ca/News/2015/7/6/TD-Bank-flip-flopped-on-Canadas-economic-outlook-over-the-weekeend.aspx. Apparently Bank of America Merrill Lynch has said Canada ‘appears’ to have slumped into a recession. According to the article, CIBC called it “a real possibility.”

Add to this the fact that, while economists have mixed emotions on the state of the economy and Canadians are carrying more debt than ever, this past summer the Huffington Post also reported that, according to Stats Canada, while the economy grew – incomes stagnated: http://www.huffingtonpost.ca/2015/07/08/canadian-income-survey-2013_n_7754884.html. The report noted “The median after-tax income of Canadian households was $53,500 in 2013, up by just $100 from 2012, according to StatsCan’s Canadian IncomeSurvey.”

Interest rates continue to be a hot topic when it comes to lending - and continuous changes mean constantly having to stay on top with current trends. Purview For Lenders can help - visit lenders.purview.ca today.