Binge borrowing raises Canada’s household debt burden
We worry about binge eating and binge drinking, but it appears that we are not paying enough attention to Canada’s latest problem – binge borrowing. Incredibly low interest rates and sky high house prices have contributed to this trend. The Bank of Canada, the federal government and many economists have long been concerned that consumers who have been binge borrowing are now exposed to risk in the event of an economic shock or significant downturn.
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Just when we thought Canada’s household debt burden couldn’t go higher!
Just when we thought that Canada’s household debt burden was at its peak, in the third quarter of 2015 Canada’s household debt burden hit another record high. This means that Canadian’s debts grew faster than their incomes. According to Statistics Canada:
• The ratio of household credit-market debt to disposable income rose to 163.7% in the three months ended September 30, up from 162.7% in the second quarter (this means the average household had nearly $1.64 in debt for every dollar of disposable income)
• This was the highest ever reading in this key ratio for gauging consumer debt loads
• Debt rose 1.4% in the quarter, while disposable income increased by 0.8%
• Total credit-market debt reached $1.89-trillion in the third quarter, also a record
• Mortgage debt was $1.23-trillion
• Consumer credit – credit cards, car loans, personal lines of credit and other personal loans – totalled $572-billion
What will your debt do in 2016?
Unfortunately Canadians ended 2015 with more debt than they started off with and this is a trend that expected to continue into 2016. Are you ready to stop binge borrowing and get control of your finances before you are facing a financial crisis? Professional help is just a phone call away. Contact Ira Smith Trustee & Receiver Inc. As a firm of professional trustees we’re experts on dealing with debt. Our approach for every file is to create an outcome where Starting Over, Starting Now becomes a reality, beginning the moment you walk in the door. Call us today and take the first step towards living a debt free life.
