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Heshani Makalande

Canadian debt load: $26,000 - excluding mortgages - Moneyville.ca - 0 views

  • Already at record levels, Canadians now owe just under $26,000 on average on their lines of credit, credit cards and auto loans, according to credit rating agency, TransUnion.
  • That’s an increase of 4.5 per cent, or another $1,000, over the same period last year.
  • The fear is that higher rates could push more consumers beyond their ability to repay their loans
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  • Debt growth in Canada is slowing from the double-digit pace seen before the recession
  • And total borrowing, including mortgages, typically the biggest household loan, is slowing, major Canadian banks said recently in their quarterly reports.
  • The Bank of Canada’s trend-setting overnight lending rate is just 1 per cent. But with inflation running at 3.3 per cent, above the central bank’s ideal range, Carney is under pressure to start raising lending rates to dampen demand.
  • Total debt per consumer increased to $25,597 in the first three months of this year,
  • Among types of loans, TransUnion said credit card debt, usually the most expensive to carry, barely budged from a year ago, falling $25 to an average of $3,539.
  • In a sign some borrowers may already be struggling, the national credit card delinquency rate rose 11 per cent. The rate measures the ratio of consumers who take 90 days or more to pay their bill.
  • The average line of credit, the most popular loans for their low cost and high flexibility, rose 5.9 per cent to $33,762 compared to last year. However, total line of credit debt declined for the first time in five quarters.
  • One noticeable shift was the decreased use of lines of credit, Higgins said. The category is the largest among consumer loans, making up 41 per cent of the total, and even more in Ontario, at 57 per cent
  • The study found debt loads rose in all provinces, led by Quebec and Newfoundland and Labrador. British Columbians had the highest load at $36,649.
  • Lines of credit are the most popular form of consumer debt, excluding mortgages, accounting for more than 41 per cent of outstanding debt at the end of the first quarter. Debt on lines of credit stood at an average $33,981, up 5.9 per cent from $31,867 in the first quarter of 2010.
naheekim

Canadian household debt swells to $1.3 trillion - CBC News - 1 views

  • Canadians are increasingly relying on credit cards and credit lines to finance day-to-day expenditures, and the total national household debt in Canada has reached an all-time high of $1.3 trillion,
  • The survey found that 42 per cent of respondents said their personal debt was rising in the past three years, and 21 per cent said they couldn't manage their debt
  • Some 58 per cent of respondents said that day-to-day living expenses are the main cause for the increasing debt.
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  • The survey interviewed 2,014 people and had a margin of error of 2.2 per cent, 19 times out of 20.
  • Third of non-retired Canadians report not saving
  • Many Canadians are not aware of how the economic downturn has impacted their financial situation and continue to load up their credit cards and lines of credit
  • The report finds that 32 per cent of non-retired respondents said they were not devoting any funds toward saving, even for retirement, up from 25 per cent in 2007
  • Of those making under $35,000 a year, 49 per cent surveyed reported that their debt levels rose in the last three years. In comparison, 42 per cent of those making $35,000 to $75,000 a year reported their debt levels rose, while 38 per cent of those making over $75,000 annually reported an increase
  • Personal lines of credit expanded to a new high of $181 billion outstanding in April, an increase of 6.2 per cent year-to-date, and up 20.4 per cent from a year earlier. This type of debt has bloated from $100 billion five years ago and less than $50 billion at the start of the decade.
  • Personal loans from banks totalled $48.5 billion, up 8.1 per cent from a year earlier, and bank credit-card receivables were up 8.9 per cent at $51.5 billion.
Steven Iarusci

The Canadian Press: Canadian borrowing grows 4.5 per cent in first quarter from year ago - 0 views

  • Canadians' average non-mortgage debt grew 4.5 per cent to $25,597 in the first quarter compared to a year earlier, signalling that consumers aren't necessarily clamping down on borrowing even as they rein in spending.
  • Total debt per consumer, including credit cards, car loans and lines of credit but excluding mortgages, was up from $24,497 in the same quarter of 2010,
  • most in Quebec and Newfoundland and Labrador, with debt rising by 7.8 per cent in both provinces, while British Columbians had the highest average consumer debt at $36,649
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  • consumer debt rose in all provinces
  • the trend still remains modest compared to the double-digit, pre-recession levels
  • Average credit card debt
  • sign of troubled credit health, the national credit card delinquency rate — the ratio of credit card accounts that are 90 days or more overdue — grew 11 per cent from the first quarter of 2010.
  • consumers are focused on consolidating debt after borrowing heavily during the recession
  • Lines of credit are the most popular form of consumer debt
  • more than 41 per cent of outstanding debt at the end of the first quarter
  • consumers should take care to rein in their borrowing
  • consumer spending slowed during the first quarter, to just 0.1 per cent growth
  • average borrower debt on auto loans was also up in the quarter — by 12.4 per cent to $16,189 from $14,402 in the first quarter of 2010
  • higher energy and particularly gasoline prices are taking a bigger bite out of household budgets, leaving less for other forms of expenditures
  • high levels of indebtedness are expected to weigh down purchases going forward
naheekim

TheSpec - Average Canadian family $100,000 in the red - 0 views

  • The average Canadian family has joined the $100,000 club, but it’s one they most likely don’t want to belong to.
  • Average Canadian household debt has hit $100,879. That’s close to twice as much as we owed 20 years ago, according to a study by the Vanier Institute for the Family
  • At the same time, the rate at which Canadians save has dropped
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  • In 2010, that savings rate has dropped to 4.2 percent — about $2,500 per household.
  • the recession has shaken out the labour market. “We’re experiencing a gain in jobs, but people are now in jobs that paid less than what they did.
  • Mortgages account for about two-thirds of the $100,879 owed by the average household, or about $63,126 per household, with 55 per cent holding mortgages and 45 per cent mortgage-free. The other third is consumer debt, which includes credit cards and personal loans.
  • “The debt-to-income ratio is concerning … but recently, (mortgage) credit demand has slowed and consumer credit demand has slowed considerably as well. It’s now at less than 5 per cent, which is half of what we saw in the previous five years on average.”
  • Personal debt consolidation and restructuring expert Jim Ferguson said the most common reason people are getting into overbearing debt is the ease of availability of credit
  • Canadian debt levels, relative to income, are still meaningfully below peak U.S. levels, but that a further sizable increase would be worrisome.
  • “Household financial assets are also growing fast due to the strong stock market, which dampen concerns about the debt, but assets can vanish more quickly than debts.”
naheekim

Household debt continues to rise - Business - CBC News - 2 views

  • Household liabilities grew by 6.5 per cent in the fourth quarter, compared with the same period a year ago, the slowest annual growth rate since the fourth quarter of 2002.
  • The average debt-to-personal disposable income ratio edged down to 146.8 per cent in the quarter, but only because a 1.8 per cent gain in average personal disposable income outpaced a gain in credit market debt.
  • But the rate at which Canadians piled on debt slowed, with nonmortgage credit, such as credit cards, slowing the most, at 5.8 per cent from a year ago.
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  • Overall household liabilities grew by 6.5 per cent from the same period a year ago levels.
  • Household net worth per capita increased from $178,200 in the third quarter to $181,700 in the fourth quarter.
  • The rate of growth in net worth, after rebounding from the recession, has stayed in a range of between five and six per cent. That compares with a pace of between nine to 10 per cent in the five years leading up to the recession.
  • "Once interest rates start to rise over the latter half of 2011, the debt-service ratio is expected to climb substantially."
  • Measuring all debt — government, business and family — national net worth edged up 0.3 per cent to $6.3 trillion in the fourth quarter, the slowest quarterly growth of the year.
Maria Li

Canadian consumer debt rises $1,000 per person - 1 views

  • The average debt load per Canadian consumer rose 4.5% this quarter over last year, according to new figures compiled by TransUnion
  • That works out to $1,000 per person and excludes mortgage costs.
  • Credit card, line of credit and auto-loan debt jumped most in Quebec and Newfoundland and Labrador with gains of 7.8% in both provinces. Quebec's total average debt load per consumer stood at $18,025 for the quarter. Newfoundland's was $23,372. The national average is now $25,597.
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  • Lines of credit are the largest category of consumer debt in the country accounting for 41% of all outstanding debt though delinquency rates are very low. Line of credit debt was up 5.9% in the quarter over last to an average of $33,981. When compared to the final quarter of 2010 however, line of credit borrowing is down for the first time in several years.
  • This may be “an early sign that Canadians are shifting to a more conservative and restrictive form of financing to manage their debt loads,”
Steven Iarusci

Canadians load up on mortgages, cut card debt - 0 views

  • The bank set aside $145million in provisions for credit losses, down $104-million as more customers repaid their loans.
    • Steven Iarusci
       
      BMO is the bank in question.
  • consumer credit-card balances are declining as bank customers start to heed warnings about taking on too much debt
  • On the residential mortgage side, Mr. Downe said he expects to see growth start to "soften" in the coming months
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  • record household debt levels have left this country vulnerable to economic shocks
  • the Canadian banks will report a slight increase in profit for the quarter as they contend with the impact of declining consumer borrowing, moderating capital markets activity and other headwinds.
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  • With domestic household debt levels hovering close to where they were in the United States prior to the financial crisis, many observers are warning that Canadians need to start paying down debt if the economy is remain on level footing
  • anadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • Canadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • growth in the overall home loan market "is continuing to be more robust,"
  • Canada's fourth-largest lender on Wednesday kicked off second-quarter bank earnings season with a 7.5% increase in profit on the back of lower provisions for bad loans
Maria Li

Canadians keep loading up on debt | Personal Finance | Financial Post - 1 views

  • Add another $1,1oo to the average Canadian debt load — and that’s not even considering mortgage loans
  • average Canadian debt, not counting mortgages, climbed to $25,597 in the first quarter, up from $24,497 a year earlier for a 4.5% increase
  • debt was down $112 from the fourth quarter which is in line with seasonal trends
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  • Canadians are doing a better job of managing their credit card debt which was down $25 on a year over year basis to an average of $3,539 at the end of the first quarter
  • irst quarter data shows a continued increase in the total debt per consumer, although the trend still remains modest compared to the double digit, pre-recession levels
  • Lines of credit continue to drive debt and are the largest contributor after mortgages, accounting for 41% of the outstanding debt in Canada at the end of the first. Delinquency longer than 90 days were .21%
Linda Lei

Executives should monitor household debt - Ivey Business Journal - 0 views

  • Household debt is the personal and mortgage debt of Canadian consumers.  It has been on a tear.  According to Statistics Canada, Canadian household debt reached a record 148 percent of disposable income in the third quarter of 2010 before closing the year at 147 percent.  It was 50 percent in 1990 and 110 percent in 2000
  • The Bank of Canada estimates home equity lines of credit and loans may be up as much as 170 percent in the last decade while mortgage debt at is about half that rate.  Home-equity lines of credit and loans are now about 12 percent of household debt and often end up financing non-housing related purchases like vacations and vehicles.  At the margin, too many Canadians are living off their homes.
Linda Lei

Consumer debt and home equity | Direct Talk with Peter Aceto - 0 views

  • Here are some facts. In this low interest rate environment, Canadians’ debt levels – including credit cards, loans and mortgages – have grown much faster than their incomes. Debt levels are now about one and a half times disposable income, an even higher level than the debt-to-income levels of Americans. Total consumer debt in Canada now exceeds a staggering $1.4 trillion. The Bank of Canada and the Finance Department have expressed concern about personal debt, specifically about what would happen if interest rates were to rise and Canadians discovered they could not afford to be carrying these debt levels.
Steven Iarusci

Consumer fatigue an ominous sign for economy - The Globe and Mail - 1 views

  • Consumers typically account for 60 per cent of the country’s gross domestic product, and rising living costs along with elevated debt levels suggest they won’t be much help this year
  • Gross domestic product expanded at an annualized 3.9 per cent in the first quarter, the fastest pace in a year, led by business investment and manufacturing, Statistics Canada said
  • that pace will be cut by almost half in the second quarter, while Finance Minister Jim Flaherty told reporters Monday he’s anticipating “more modest” growth in the rest of the year
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  • In the near term, households are under pressure as rising food and energy costs cut into their budgets
  • “I will never, never do that again. I want to have the money up front before I buy something, because I don’t want to get into that trouble again,” said Ms. Thornton
  • the household debt service ratio – debt payments to disposable income – jumped to a three-year high of 7.8 per cent from 7.2 per cent
  • Kim Thornton, for example, is one fatigued consumer. The mother of four says her family ran up about $50,000 in debt in prior years on credit card spending
  • In the longer term, high debt levels could restrain spending for years
  • Canadians are getting the message about whittling down debt, and that is translating into fewer purchases of discretionary goods
  • reduced hours and leaner wages – a legacy from the recession – mean many families have less money with which to service their debt, he added
Steven Iarusci

Report cautions that over-indebted consumers can't drive economy - 0 views

  • a rate hike may come in the fall
    • Steven Iarusci
       
      Interest rates
  • the main message is that consumers cannot be the main engines of economic growth over the next couple of years,” the authors conclude. “Instead, the economy will have to rely on other sources of growth, such as exports and business investment.”
  • Canadians have “eased off the debt-accumulation throttle,”
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  • still net borrowers, meaning they borrow more than they save
  • consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households
  • some of the drop in household indebtedness is explained by strong income gains, not by debt repayment per se
  • sustainable personal growth is likely in a range of 4.0-4.5 per cent. Credit continues to grow at a pace that is two percentage points above that
  • the level of Canadian household debt — which in December officially surpassed those of our neighbours to the south — is unsustainable
  • total consumer debt load is reported to be about $1.5 trillion
  • Data released late last year suggested Canadians owed on average $112,000 — a figure that includes all kinds of debt, including mortgages — and a debt-to-income ratio of 150 per cent means they were spending $1,500 for every $1,000 in take-home pay
  • Factors that will moderate credit growth over the short term include spending fatigue, a soft landing in the housing market, stricter mortgage rules and Canadians preparing for the higher interest rates that are sure to come as the economy recovers.
Linda Lei

A warning for Canadian consumers, household debt could spark 'made in Canada' recession... - 1 views

  • “One scenario is that interest rates rise, house prices drop, and more people begin defaulting on their credit card debt and mortgage obligations. An equally worrying – and perhaps more likely scenario – is that interest rates go up a little, and more of people’s disposable income goes to repaying their debt, leading to a significant reduction in consumer spending. Since personal spending on consumer goods and services accounts for 58 per cent of the Canadian gross domestic product, this decrease would provoke a ‘made in Canada’ recession.”
  • Total household debt in Canada now tops $1.5-trillion, or three times the national debt, MIT said in a statement outlining the paper by Mr. Dunfield and his colleagues in the Action Canada fellowship. That means that while Mr. Flaherty is being fiscally responsible, many of us may not be following suit.
  • “Canada has also avoided the wide regional performance differences seen in the U.S., where states such as Nevada, California and Florida suffered significantly larger declines than the nation overall,” Mr. Goldin added. “In Canada, house prices in Calgary and Vancouver fell further than those across the nation, but the variance was relatively minor by comparison
Maria Li

Rate hikes okay for most but a 'financial shock' for many - The Globe and Mail - 0 views

  • Most Canadians should be able to handle higher interest rates expected later this year, but many will still see a "financial shock," Toronto-Dominion Bank economists say
  • "The main question is how households will respond to the eventual rebalancing of monetary policy, TD economists Craig Alexander and Diana Petramala write in a new report that looks at indebtedness among Canadian households.
  • Canadians will experience a financial shock when interest rates eventually rise, but the vast majority of households should be able to cope so long as interest rates rise only gradually
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  • Bank of Canada held its benchmark overnight rate steady at just 1 per cent, citing global uncertainty and the impact of the strong Canadian dollar, but said rates must eventually rise
  • Annual personal credit growth slowed to a year-over-year pace of 6.4 per cent in April, compared to an average 10.9 per cent in a period spanning 2004 to 2008
  • The moderation in credit growth has been evident in all measures of debt
  • The debt-service ratio, the interest households must pay on their debt each month as a share of personal disposable income, climbed to a two-year high of 7.6 per cent in [the first quarter of] 2011, despite still record low interest rates.
Linda Lei

Canada Tightens Mortgage Rules to Curb Household Debt - Businessweek - 0 views

  • Jan. 17 (Bloomberg) -- Canadian Finance Minister Jim Flaherty tightened rules to restrain record household borrowing, giving the Bank of Canada more scope to extend a pause in interest rate increases.
  • Flaherty said today Canada will shorten the maximum amortization period for government-insured mortgages to 30 years from 35 years, lower the maximum amount homeowners can borrow against the value of their homes, and withdraw its insurance on home-equity lines of credit
Linda Lei

Canada's personal debt rises - Business - CBC News - 1 views

  • Canadians rang up five per cent more in personal debt in the first three months of 2011 compared with 2010, according to a report released Wednesday.
Susan Cui

Best Way to Fix Housing Market Let Prices Fall (Fast): Tech Ticker, Yahoo! Finance - 3 views

  • "Fixing the housing market" is usually defined as:Stopping house prices from falling Stopping foreclosures
  • Prices. The best way to stop prices from falling is to let them fall far enough to reach equilibrium, fast.
  • Foreclosed houses are selling like hotcakes because prices are finally attractive enough to draw in new capital.
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  • Un-foreclosed houses are NOT selling like hotcakes, but this is because their owners have yet faced up to the reality of how little they are worth (or, put differently, because they don't yet have to sell).
  • The vast majority of plans to "stop prices from falling" involve subsidies of one form or another (tax credits, subsidized mortgage rates, etc.)  These may slow the decline, but they won't stop it
  • subsidizing/encouraging debt-bingeing and homeownership is what got us until this mess in this first place.
  • The fastest and most effective way to stop prices from falling is to let them fall until they've reached equilibrium. And then start rebuilding wealth, equity, and economic growth from there.
  • Lots of Americans are going to lose their houses in the next few years regardless of what we do.
  • Keeping the number of foreclosures as small as possible
  • will just delay the inevitable
  • Importantly,
  • Foreclosures are caused by owners' inability to make debt payments.
  • The best way to stop foreclosures, therefore, is to get people out of houses they can't afford and into houses they CAN afford (whether by renting or buying).
  • the house-price issue
  • (No reason to buy or build now if you think prices will be cheaper tomorrow).
  • Businesses and consumers
  • open up their wallets
  • when house prices stop falling. And the fastest way to get there is to let them fall.
Kiruban Mahadeva

Canada 2011 Budget: Flaherty Budget Speech (Text) - Bloomberg - 1 views

  • The global economy is still fragile. The U.S. and our other trading partners are facing challenges. Compared to other countries, Canada's economy is performing very well-but our continued recovery is by no means assured. Many threats remain.
  • Securing our recovery from the global recession The Next Phase of Canada's Economic Action Plan is critically important
  • Now is not the time for instability. It would make it harder for Canadian businesses to plan and to expand. It would drive investment away to other countries. It would jeopardize the gains we have made.
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  • We will keep taxes low. We will undertake additional targeted investments to support jobs and growth
  • massive tax increases
  • We will not give in to Opposition demands to impose
  • This reckless policy would lead to continuing deficits and higher taxes on all Canadians. It would stall our recovery, kill hundreds of thousands of jobs and set families back.
  • Sustained growth comes from the private sector. We will help businesses to create jobs. We will not raise taxes on growth.
  • Since July 2009, the Canadian economy has created more than 480,000 new jobs-more than were lost during the recession
  • we remain concerned about the number of Canadians looking for work
  • We need to keep protecting and creating jobs now
  • Keeping taxes low A key part of that foundation is low taxes.
  • Our government has delivered tax relief for all Canadians
  • Our tax cuts are also helping employers to invest, grow and create jobs.
  • Our commitment to low taxes is supported by a strong consensus: that protecting Canada's tax advantage is key to securing our recovery.
  • Canadian industries Even so, in the current global economic climate, many businesses remain hesitant to invest and to hire.
  • Our government will take further action to encourage them to expand and create jobs.
  • The Hiring Credit for Small Business will provide a one-year EI break for some 525,000 Canadian small businesses
  • Expanding international trade Beyond this, we will promote new export opportunities for all Canadian businesses
  • We need to keep expanding our access to foreign markets, to create new jobs here at home.
  • We will provide greater financial security for Canadians, and practical help to make ends meet.
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