We love debt even more than Americans

Canadian consumer debt.  It’s not just growing, it’s growing faster.

Transunion has released their latest quarterly analysis and it shows Canadian household debt loads increasing 400% percent faster than inflation.

Statistics Canada pegs Canadian household market debt at an astounding 163% of disposable income.

For comparisons sake, the US housing bubble saw household debt peak in 2007 at 128% of disposable income.  By 2011 the US rate was down to 112%.

The good news? Credit card debt is actually down year over year and delinquencies across all types of debt remain low.

Transunion puts the average household non-mortgage debt at $26,768.  Do you owe more or less than that?

Higgins said the increase stands in stark contrast to encouraging signs from relatively stagnant debt growth in the prior three quarters.

He also points out that in the past five years, debt loads have increased 400 per cent more than the rate of inflation — with inflation as measured by the Consumer Price Index up nine per cent and consumer debt jumping more than 37 per cent.

“Debt’s outpacing us and continues to outpace us, so at some point in time there’s going to be a reconciliation,” Higgins said.

“Hopefully it’s not drastic and hopefully it doesn’t hit everybody, but there’s going to be a correction somehow along the way.”

Read the full article over at the CBC.

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Anonymous
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Anonymous

@rp1: Believe it or not that was Rosie from Gluskin Sheff. I found his recent view on Canadian debtloads surprising. He said factoring in medical care our debtloads are closer to a buck twenty on the dollar.

Ralph Cramdown
Guest
Ralph Cramdown
@VMD: “The [US] mortgage interest deduction, however, is now at risk, due to negotiations over the so-called “fiscal cliff” […] While it is impossible at this point to know what the outcome will be […]” 1) The MI deduction disproportionately benefits the upper middle class and the rich. If you’ve a small mortgage and property tax bill, your standard deduction will exceed your alternative, itemized decuctions, or itemized will only win by a small amount. 2) Most people don’t realize this. 3) So it won’t go away. The reds don’t want higher taxes, they want smaller government. And the blues don’t want to raise taxes on homoaners. And this whole fiscal cliff thing? The reds have been dumb enough to shut down government before, and ended up wearing it, but they haven’t yet been dumb enough to raise everyone’s taxes… Read more »
squeako
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squeako
Vote Down The Facts Says: “I think there’s a happy medium between frugality and splurging on pointless garbage.” I think we are on the same page.. On a funny note though, a lady I used to know, spent money on non-neccessities (in the old days it would be called luxuries), but frequently complained about bills. I kindly loaned her $1000 one day, because she was broke. She used to say “pay yourself first”, and the funny part was that she interpreted this as go and blow money on stuff. The reality for most people with average jobs is that they have to be mindful about their spending, there is no other choice, and have been so through history. And one day we are going to be history too. I stick to the analogy that a river is made out of… Read more »
Ralph Cramdown
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Ralph Cramdown
@DaMann: “@squeako: I hear you, and agree with you completely, but in all honesty I can see why people are doing it. We have been in a reward the debtors and punish the savers era for along time now. Almost a decade.” I don’t think so. high inflation punishes savers and rewards debtors. On the contrary, over the last decade, you could have bought just about any investment grade bond and watch its value climb and climb as interest rates declined. I’ve saved a few thou a year shopping for groceries, a few thou a year driving a used car (and a much nicer one than I would have bought new), deferred a few thou a year in taxes by doing what the government wanted me to, saved a few more hundreds here and there, and it’s starting to add… Read more »
VMD
Member

US mortgage interest deduction now at risk
Nov 15, 2012
“It is arguably one of the most popular U.S. tax deductions, and for some it is the necessary stimulus to buy a home.
The mortgage interest deduction, however, is now at risk, due to negotiations over the so-called “fiscal cliff”— the year-end deadline for large spending cuts and the expiration of tax cuts.
While it is impossible at this point to know what the outcome will be, it is certainly worth running through the possibilities…”

Yalie
Guest
Yalie

Is anyone else feeling an immense sense of schadenfreude watching Bull Bull Bull slowly descend into madness on this board as his real estate-derived income and “wealth” quickly evaporate?

I have no sympathy for you Bull, none. You have likely put many others into financial hell by foisting overpriced garbage on unsuspecting consumers (assuming, as I do, that you are a “real estate investor”, mortgage broker, etc). You are getting exactly what you have given to others, which is exactly what you deserve.

DaMann
Member
DaMann
@squeako: I hear you, and agree with you completely, but in all honesty I can see why people are doing it. We have been in a reward the debtors and punish the savers era for along time now. Almost a decade. We keep hearing Carney warning people and warning people and on and on. Only to turn around and do nothing time and time again. I have talked to a friend who is in debt up to his ass. He just laughs and says “pffftt the interest on that LOC is only $150 a month” People don’t care, it’s free money. Yet my money earns a whopping 1% in the bank. At THIS point in time, who is the moron? I’m starting to feel like one. I live frugally and everyone else is having the time of their life, traveling… Read more »
rp1
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rp1

#26 @Anonymoose: “The middle and lower middle class here have higher wages which I think is awesome,”

Don’t forget the social safety net, which despite its glaring strains is a much better deal for the middle and lower classes. The problem is we pissed it all away. As some fucker from a bank noted: Canadians can afford more debt to disposable income because we pay less for health care through taxes, etc etc. So we put all that at risk.

Can't Wait
Guest
Can't Wait

@pricedoutfornow:
“I know quite a few people who are in negative positions.”

And are they Caucasians On Credit ( COC ) or Hot Asian Money ( HAM )?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@mclovin: Before whatever big banks and the mainstream media said was ridiculed on this board. Now it’s held up as being the gospel.

If all one has to do to become filthy stinking rich is listen to the mainstream media and the big banks, what the FUCK are all of you doing here day after day?

What value do your opinions and analysis have, if you’re predictive power is no better than the Globe and Mail?

rp1
Guest
rp1

#33 @squeako: “If you dont have a good chunk of money stashed away for a rainy day, you better buy the jam that is 25cents less than the other jam, start to make due, always ask: is this important?”

What are you, crazy?! Seriously it doesn’t matter. The debt numbers are beyond what can be serviced through income, so spending within your means doesn’t help. The problem is they bought a 1.2 million dollar house or a 600k condo. How are you going to fix that by saving $5000 per year on groceries ($100 per week).

Vote Down The Facts
Guest
Vote Down The Facts

@squeako:

I think there’s a happy medium between frugality and splurging on pointless garbage. Personally, I consider the money I earn to be something that can be used to increase my quality of life. I don’t want to spend the best years of my life living so far below my means that it makes me miserable.

squeako
Guest
squeako

Just one more. Co incidentially came across this on CL.
Sign of the times…

http://victoria.en.craigslist.ca/apa/3411618850.html

squeako
Guest
squeako
Ok, I have given up the discussion about frugality, but here is my last kick: What the hell is wrong with people?? If you dont have the money,dont spend it! Is this some kind of effing rocket science? If you dont have a good chunk of money stashed away for a rainy day, you better buy the jam that is 25cents less than the other jam, start to make due, always ask: is this important? Most things/stuff are not, but your pension sure is. Which one is it going to be.. hmmm???? There is one person you should be able to count on, that is yourself, so if you dont do your due diligence, who will?? I have never seen a bank manager say, hey, I want to do biz with you b/c I am impressed by your LV purse/bimmer.… Read more »
Bo Xilai
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Bo Xilai

Does anyone have any idea how much places like Capital Direct charge in interest?

I guess they’ll be busy these days with the banks shutting down the HELOC taps and the Debt Crackheads needing their fix.

900kCrackHouse
Guest
900kCrackHouse

@Anonymoose:

I agree with your observations.

I also would suggest that if you factor in undeclared income and income earned by a spouse in a foreign country, the lower mainland likely doesn’t have the highest child poverty rates in Canada.

Guy Smiley
Member
Guy Smiley

@specialfx3000

Hey! Are those boxers still available?

Guy Smiley
Member
Guy Smiley

Does anyone know for certain if a HELOC counts as mortgage debt or as line of credit? I read the article but didn’t see anything specific to HELOC’s…?

My gut feeling is that these figures include HELOC debt and this growth reflects people using their home like an ATM.

mattymatt123
Guest

debt sluts!

Anonymous
Guest
Anonymous

@Anonymoose: Why so obsequious? You’re going to get voted down anyway for daring to admit that you like Vancouver. I’m voting you up, by the way.

Anonymoose
Guest
Anonymoose
I hope my statements below are not misconstrued, they are simply observations and not sentiments. I moved here a few years ago from the US; my wife is Canadian. I love living here, although the cost is a bit hard to stomach at times. I think people should feel lucky to live in such a beautiful place that offers so much opportunity; it seems a lot of people take this for granted and even feel entitled to it. When I first came here I was astonished at the housing prices. The math never added up how people could afford to live here, especially with an extravagant lifestyle of toys and trips, based on known incomes and living costs. I realize there is a lot of wealth here, many have done very well being self-employed, but there also seems to be… Read more »
pricedoutfornow
Guest
pricedoutfornow

@Bailing in BC:

I disagree. I know quite a few people who are in negative positions. Perhaps not in the lower mainland, but certainly in the Okanagan there are many people who bought condos or houses which are now worth up to $200k less than what they were in 2007. Someone I know owns a condo which she could sell today for $165k. Problem? Her mortgage is $240k. Also, my old street in Kelowna had houses selling for $500k in 2006 or 2007, now these same houses go on the market for $300k (and often don’t sell for that). Sooo….to say there are “few people in negative positions” in Canada is a falsehood-I guess we just don’t hear about it in the media but certainly these people do exist

TPFKAA
Guest
TPFKAA

@jesse: Wow. 28% less sales so far. And with a lower std dev too, to really rub it in!

Unsettled Worker
Guest
Unsettled Worker

“According to a survey conducted by the Mustel Research Group, 58 per cent of Metro Vancouver residents believe this is not a good time to sell a home.” (quoted from Winter Sleep for Real Estate Market in Vancouver?)

@patriotz

I agree with you for 100 %. I don´t see any possibility how to sustain our market right now. The question is what will happen next. I hope it won´t be a major crash of economy.

crabman
Guest

Steve Keen has found a strong correlation between increasing debt and falling unemployment rates. When Canadians start paying down debt, we should see a big rise in unemployment – like the current situation in the US.