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S C

Household debt - Wikipedia, the free encyclopedia - 0 views

en.wikipedia.org/...Household_debt

household debt

shared by S C on 17 Jan 13 - No Cached
  • Household debt soared in the years leading up to the Great Recession
  • Twenty years ago, the average American household’s debt was 83 percent of its income; by a decade ago, that had crept up to 92 percent; but by late 2007, debts were 130 percent of income
  • All this borrowing took place both because banks had abandoned any notion of sound lending and because everyone assumed that house prices would never fall. And then the bubble burst
  • ...3 more annotations...
  • Household debt can be challenging to reduce. Major approaches include: 1) Paying down debt over time from income or accumulated savings, if available; 2) Debt write-down or refinancing via negotiation, bankruptcy or government bailout; and 3) Inflation.
  • Debt can be reduced via negotiation with creditors or a legal bankruptcy process
  • If wages increase due to inflation, but debts remain fixed, the debts can be more easily retired
  • S C on 17 Jan 13
     
    Household debt contributes to recessions and depressions, one major cause is banks lowering their lending requirements to make more money. Household debt can be reduced through income and savings, debt negotiations and inflation.
lebiez piranaj

Canada Household Debt Much Higher Than Previously Thought; Housing Bubble Bust-Out Now ... - 2 views

www.huffingtonpost.ca/...-housing-bubble_n_1967269.html

Canadian debt finds higher housing bubble thought money household

shared by lebiez piranaj on 18 Jan 13 - No Cached
  • Canadians, you’re more indebted than you think.
  • StatsCan now says household debt amounted to 163.4 per cent of household income in the second quarter, up from 161.8 per cent in the first
  • Canadians are now carrying more debt than Americans and Brits were at the peak of their housing bubble half a decade ago
  • ...1 more annotation...
  • A recent Capital Economics report estimated a construction slowdown would cost 115,000 jobs across Canada
  • lebiez piranaj on 18 Jan 13
     
    Canadians are more than ever drown in debt. When it comes to comparing with the neighbor (US) we are carrying more debt than them. Market observers argued that Canadian consumers will no longer be able to hold up rising household debt.
Nikita Klyuev

David Rosenberg's 5 reasons Canada's household debt panic is overblown - 0 views

business.financialpost.com/...sehold-debt-panic-is-overblown

canada consumer debt credit advice

shared by Nikita Klyuev on 17 Jan 13 - No Cached
  • Nikita Klyuev on 17 Jan 13
     
    Canadian debt/income ratio isn't as bad as it looks. Because Canadians pay for their health care through their taxes, their disposable income is distorted relative to the U.S. In terms of personal income, the ratio is actually closer to 118%, rather the scary 165%. Canadian household debt relative to assets (19%) and net worth (24%) is below prior peaks of 20% and 25%, respectively. Rosenberg estimates Canada would need to see a 20% drop in the housing market to get net worth/income ratio down to the U.S. level. Canadians have more equity in their homes - 69% of the value compared with 43% in the U.S. "This equity gap is a prime reason why Canadian household net worth/income ratio (at over 500%) is some 35 percentage points above U.S. levels," Rosenberg writes. Canadians are better able to service their debts. Canadian wage growth at 4% a year is about double what it is in the U.S. - a rise that pretty much matches the average interest rate they are paying. The debt-servicing ratio in Canadian households is now just over 7% - a level it has only been below in the past 15% of the time. So even though Canadian interest rates are 75 basis points higher than in U.S, it is not hampering our ability to handle debt.
S C

Canadian consumer debt level reaches record high | Debt | Personal Finance | Financial ... - 4 views

business.financialpost.com/...ing-more-debt-than-ever-before

canadian debt consumer

shared by S C on 15 Jan 13 - No Cached
  • In the July-September period, households borrowed $27.3-billion, $18.4-billion of that in mortgages, while consumer credit levels increased by $7-billion to $474-billion.
  • “Given the prospects that interest rates will eventually rise, households must cool their spending and borrowing further.”
  • household debt to annual disposable income reached a new high at 164.6%
  • Nikita Klyuev on 17 Jan 13
     
    The new report shows household debt to annual disposable income reached a new high at 164.6%, from 163.3% the previous quarter. In the July-September period, households borrowed $27.3-billion, $18.4-billion of that in mortgages, while consumer credit levels increased by $7-billion to $474-billion. As well, household net worth rose 1% to $197,800 in the July-September period, mostly due to gains in holdings in stocks, including mutual funds, and increased value of pension assets.
  • Rohan Zahur on 17 Jan 13
     
    On a national accounting level, Canada's net worth increased by more than $9-billion in the third quarter to $6.8-trillion. That translates to $194,100 per person.
  • S C on 18 Jan 13
     
    Canadians are taking on more debt than ever before, approaching US debt levels just prior to the housing market crash.
Erica Yeo

Household debt in Canada - 3 views

www.statcan.gc.ca/...11636-eng.htm

consumer debt canada challenges statistics

shared by Erica Yeo on 17 Jan 13 - No Cached
  • In 1980, the ratio of household debt to personal disposable income was 66%; that ratio recently passed the 150% figure (Statistics Canada 2011). This means that, in aggregate, households owed more than $1.50 for every dollar of disposable income.
  • It also examines whether the relationships between debt and financial capability persist when other characteristics like income and educational attainment are taken into account.
  • younger people and parents with children at home were more likely to hold debt. Individuals under 45 made up 45% of the population, but 54% of borrowers. Similarly, married people with children accounted for 30% of the overall population, but 39% of debtors. They were also more likely to have higher levels of debt. Couples with children held one-half of all household debt, with an average debt of $144,600, higher than the overall average of $114,400. Similarly, individuals under 45 held 61% of household debt, $129,200 on average.
  • ...1 more annotation...
  • Higher education levels were also associated with an increased probability of holding debt and higher average debt. Individuals with at least some postsecondary education comprised about one-half of the population but almost 60% of those with debt. And university graduates had an average debt that was 60% higher than those with less than postsecondary education—$145,400 compared to $90,900.
Erica Yeo

Canadian Consumer Debt Poses Recession Risk, Moody's Analytics Report Says - 0 views

www.huffingtonpost.ca/...-debt-recession_n_1861056.html

consumer debt canada challenges huffington

shared by Erica Yeo on 16 Jan 13 - No Cached
  • With Canadians so deep in debt, it would be extremely difficult for domestic spending to pick up slack in the economy if things started to go downhill. That could result in a serious downward spiral in employment levels, household spending and the quantity and quality of credit outstanding, the report says.
  • "Households are spending money they assumed would be coming, then they realize they've run over the cliff because income from exports from these trading partners is not materializing and that's translating to weaker jobs.
  • domestic consumption is usually the more steady contributor to economic growth compared to exports and investment. But this time, household debt is out of control.
  • ...2 more annotations...
  • Slowing income growth, coupled with a coming rise in interest rates
  • debt service costs will start to eat up a bigger portion of their take home pay, the report says.
S C

As consumer debt grows, Mark Carney says ready to act if necessary | Debt | Personal Fi... - 1 views

business.financialpost.com/...ns-deeper-in-debt-than-thought

consumer debt personal finance

shared by S C on 16 Jan 13 - No Cached
  • emerging
  • While consumers are still spending and loading up more debt, Canadian corporate leaders are pulling back on their business plans because of weak global economic growth
  • debt-to-income ratio rose to 163.4%
  • ...9 more annotations...
  • Household debt is viewed as the biggest threat to the Canadian economy
  • much of that acquired through low mortgages rates
  • Monday’s survey showed 44% of companies plan to increase employment levels over the same period — compared to 59% in July — while 18% said those levels would decline.
  • That rate continued to rise to another record high in the first half of 2012, the federal agency said. In 2011, the ratio of household debt to income was 161.7%, up from 150.6%, under a new system of economic accounting adapted by agency.
  • Firms are generally more circumspect about near-term investment decisions and are focusing on minimizing costs,
  • ost businesses are evenly split at 35% between faster and slower sales growth expectations
  • In its autumn Business Outlook Survey, the central bank said companies “have tempered their expectations for business activity.”
  • Canadian households are continuing to pile on debt at a record pace, while corporate leaders are pulling back on their business plans because of weak global economic growth and uncertain demand.
  • While Canada’s economy is being affected by the global angst, the key areas of uncertainty abroad are all points of justifiable confidence here at home
  • S C on 18 Jan 13
     
    Consumer debt is becoming a larger threat to the Canadian economy as a whole. Meanwhile, businesses stopped expanding due to weak global growth.
Dyena Huynh

Study: Canadian consumer debt hits $26,768, highest in two years - 1 views

www.digitaljournal.com/...336848

shared by Dyena Huynh on 26 Nov 12 - No Cached
  • Canadian consumer debt grew at the fastest pace since the fourth quarter of 2010
  • Bank of Canada Governor Mark Carney has been warning households of its growing debt rate and officials are continuing to caution that household spending levels are starting to get out of control.
  • Dyena Huynh on 26 Nov 12
     
    1. Why do think consumer debt increased so much? 2. They say that getting consumers to spend more will help boost the economy, but is it beneficial when consumers are going into debt?
  • Brijesh Patel on 26 Nov 12
     
    1. i believe consumer debt has increased drastically because the generation is upgrading really quickly with new things, mainly technology and many people want to be caught up with the latest trends whether it is buying the latest iphone, clothing, real estate, buying a car etc. People begin to borrow heavy loans without thinking of a way to pay back therefore causing a big debt to themselves.
  • Samson Luong on 27 Nov 12
     
    1. I believe consumer debt has increased greatly due to the need to purchase luxuries and unnecessary goods because we live in a society where we live in a society where you feel incomplete if you do not possess a certain good. 2. I think spending money to a certain point is beneficial because it helps circulate cash, however consumers should not be spending to a point where they cannot pay back debts. Also people can spend money wisely rather on unnecessary and expensive goods.
lebiez piranaj

Canadian Household Debt: Poll Finds We May Be In Debt Longer Than We Think - 1 views

www.huffingtonpost.ca/...n-household-debt_n_940426.html

canadian debt poll finds money saving tips

shared by lebiez piranaj on 18 Jan 13 - No Cached
  • TORONTO - If experience is any indication, many Canadians could find themselves in debt years longer than they originally expected, according to a new poll issued Monday by CIBC.
  • For example, Canadians 25 to 34 on average told the pollsters they expected to be debt-free by age 44. However, the poll found that only 18 per cent of those now in the 45-to-54 age group were, in fact, debt-free.
  • "Being debt-free is a long-term financial goal for many Canadians, and this poll suggests Canadians are actively looking ahead to the stage of life they will be in when they successfully pay off all of their debt,"
  • ...1 more annotation...
  • the poll also disclosed that many Canadians see themselves as having debt for the long term, with eight per cent of poll respondents believing they will be into their 70s before their debts are paid off and 10 per cent of respondents saying they will never be debt-free.
  • lebiez piranaj on 18 Jan 13
     
    According to a poll disclosed from CIBC, tells us that many Canadian are finding themselves in debt for longer periods of time then they had originally expected. 
Brijesh Patel

Watch Your Debt Level - 0 views

www2.macleans.ca/...nadians-watch-your-debt-levels

credit levels increased

shared by Brijesh Patel on 18 Jan 13 - No Cached
  • Brijesh Patel on 18 Jan 13
     
    For every dollar of after-tax income Canadians bring home, they're borrowing more than $1.64. Statistics Canada said that between July and September of this year, households borrowed $27.3 billion Consumer credit levels increased by $7 billion to $474 billion.
  • Brijesh Patel on 18 Jan 13
     
    For every dollar of after-tax income Canadians bring home, they're borrowing more than $1.64. Statistics Canada said that between July and September of this year, households borrowed $27.3 billion Consumer credit levels increased by $7 billion to $474 billion.
Nikita Klyuev

Calculating the optimal debt load - 0 views

business.financialpost.com/...how-much-debt-is-too-much

canada consumer debt credit

shared by Nikita Klyuev on 17 Jan 13 - No Cached
  • Nikita Klyuev on 17 Jan 13
     
    From 84% in 1990 to 164.6% today - it's an alarming leap, a dramatic number that may actually have scared some of us into doing something about our debt load. Someone with a $300,000 mortgage and after-tax household income of $100,000, for example, really shouldn't be in a full-fledged panic because they have a debt-to-income ratio of 300%. That's a normal scenario in today's market and not cause for alarm by itself. Still more relevant to consider might be your debt servicing costs and then what they would be if interest rates went up two percentage points. On average, Canadian households pay about 7.6% of their after-tax income on interest payments. That number was 8.8% in 2000 and consumers were able to handle the load, says Mr. Tal
Rohan Zahur

Stats Canada Discusses household debt - 0 views

www.theeconomicanalyst.com/...anada-discusses-household-debt

Consumer Debt

shared by Rohan Zahur on 17 Jan 13 - No Cached
  • Rohan Zahur on 17 Jan 13
     
    Consumer debt as a percentage of income is highest in BC, Alberta, and Ontario where house prices are highest
Cristina Raileanu

Canada's dirty economic secret: we're as indebted as the rest of you | Colin Horgan | C... - 0 views

www.guardian.co.uk/...ada-dirty-economic-secret-debt

canada consumer debt

shared by Cristina Raileanu on 17 Jan 13 - No Cached
  • is acknowledged to have weathered the economic storm better than any other major western economy, bank bailouts have been avoided, sustained growth has returned,"
  • "highest credit rating in the world,
  • Canada learned some sound policy lessons from its own financial and economic meltdowns in the latter decades of the 20th century, a lot of us are now personally up to our eyeballs.
  • ...3 more annotations...
  • Canadian "household debt as a percentage of disposable income has risen by almost 60 percentage points to 165% today,"
  • The bulk of this rise in debt – 66%, or $636 bn – has been in the form of mortgage debt, putting Canadians in an uncomfortable neighbourhood
  • between Spain and the United States in the ranking of household mortgage debt,"
Cristina Raileanu

Raising Interest Rates? Canada's Impending Household Debt Crisis | Global Research - 0 views

www.globalresearch.ca/...5318278

crisis canada consumer debt

shared by Cristina Raileanu on 17 Jan 13 - No Cached
  • If the bank feels you can pay $2,000 a month on a mortgage, then you generally qualify for the loan, if you have the right credit record and collateral.
  • It is worth noting here that the money your bank loans for a mortgage is created out of thin air at the push of a button. They do not lend the money of their depositors for this.
  • interest charges are built into just about every product and service available. Higher interest rates means businesses would have to charge more to recover their loan costs.
  • ...3 more annotations...
  • For an extreme example of what can happen one only has to turn back the clock to the 1980s, when 20% interest rates destroyed many businesses and individual lives;
  • it is the average consumer that is blamed for the problems created by the so-called experts.
  • one could take each aforementioned quote by the experts, reword it to mean the exact opposite, and thereby have a better understanding of the situation.
Ms Cuttle

Are Canada's financial institutions in perfect shape? Don't bank on it - Business - Mac... - 1 views

www2.macleans.ca/...dont-bank-on-it-2

finance financial crisis

shared by Ms Cuttle on 16 Nov 12 - No Cached
  • Less than 24 hours after Lagarde put down her dessert fork, debt rating agency Moody’s put six of Canada’s biggest banks under review for a possible ratings downgrade, citing high consumer debt levels and a frothy housing market.
  • Household debt-to-income ratios now stand at 163 per cent, higher than in the United States before its housing crash and up from 147 per cent two years ago.
  • RBC last week revealed plans to spend $1.4 billion to buy auto lender Ally Financial while TD said it was buying retailer Target’s credit card business. The Bank of Nova Scotia also recently purchased the online bank ING Direct for $3.1 billion.
  • Ms Cuttle on 16 Nov 12
     
    Should Canadians be worried about the financial stability of our banks?
lebiez piranaj

Consumer debt loads grow at fastest pace in 2 years - 3 views

www.cbc.ca/...transunion-debt-credit.html

consumer debt fastest pace

shared by lebiez piranaj on 25 Nov 12 - No Cached
  • Canadian debt loads grew at their fastest pace in two years during the summer
  • Credit reporting agency TransUnion's latest quarterly analysis of Canadian credit trends found average consumer non-mortgage debt jumped 4.6 per cent year-over-year in the third quarter to an average of $26,768
  • Measured on a quarterly basis, debt grew 2.1 per cent in the summer from the second quarter of this year.
  • ...9 more annotations...
  • 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.
  • A 11 per cent uptick year-over-year in auto loans to an average of $19,228 was the main driver of the growth in overall debt
  • Canadian instalment loan borrower debt grew 2.3 per cent over the third-quarter of last year to an average of $22,849.
  • Borrowing on lines of credit fell 0.2 per cent year-over year, but grew nearly one per cent since the second quarter of the year and sits at an average of $34,050.
  • delinquency levels — those who are late or default on a loan— continue to remain low across all categories.
  • the number of Canadians missing or defaulting on loan payments fell to pre-recession levels
  • household market debt has risen to 163 per cent of disposable income.
  • "We're moving into the Christmas season so I anticipate we might see another high increase year-over-year when we get to the Q4 numbers
  • lebiez piranaj on 26 Nov 12
     
    1. Despite receiving warnings about Canadian debt issues , it turns out that the average credit card debt has actually decreased by one percent while the year-over-year auto loans are now the main driving force behind the overall growth of our debt, why do you think this is happening? 2. Thomas Higgins, TransUnion's vice-president of analytics and decision services said that he believes the reason why consumers continue to ramp up debt is due to the media spreading overly positive news regarding the economy and throwing the readers into a state false optimism. Do you believe this is the case and why?
Brijesh Patel

Canadian consumer debt soars 53 per cent - 1 views

ca.finance.yahoo.com/...ars-53-per-cent-155008666.html

consumer debt

shared by Brijesh Patel on 26 Nov 12 - No Cached
  • Brijesh Patel on 26 Nov 12
     
    - In the past 5 years, consumer debt has increased by 53% - The most borrowing occurring in the two years right after the global financial crisis. - Canada's household debt to income ration jumped to 163.4% - Canada's debt-to-income ratio has now reached a record high, topping levels seen in the U.S - Currently, the Canadian housing market is in a state of decline, with home sales dropping 15 per cent in September.
  • Brijesh Patel on 27 Nov 12
     
    #2 what is causing the debt ratio to increase drastically ?
JJ Igra

Budget watchdog finds average public service job costs $114K - 0 views

www.cbc.ca/...p-page-cost-civil-service.html

JJ King Goverment

shared by JJ Igra on 12 Dec 12 - No Cached
  • JJ Igra on 12 Dec 12
     
    The average public servant costs taxpayers $114,100 a year in total compensation. "Total compensation (per full-time employee) in the federal workforce outpaced not only CPI (inflation), but also that of the Canadian business sector and provinces and territories over the study period," the report states. Although the government has recently announced new restraint measures that will cut the number of public servants, the PBO estimates that average compensation for salaries and benefits will reach $129,800 in the next three years. Canadian Taxpayers Federation federal director Gregory Thomas said he found some of the numbers "staggering," particularly since average household income growth is in the neighbourhood of one per cent. "This government has been in office for six years, you wonder when are they are going to get serious about controlling payroll costs," he said. Ottawa recently announced it has already shed about 11,000 in the first six months of the program. When the current austerity measures are completed, the public service will decline to 349,000, if Ottawa sticks with the program. "The period between 2012-13 and 2014-15 resembles those of the mid-1990s, as both personnel expenses and federal employment (are) reduced," the report states. "The PBO expects a significant slowdown in personnel expenses, given assumptions about baseline employment." Compensation is expected to continue to grow, although not at the rate of the past 13 years. The report projects that by 2014-15, the average annual compensation for a federal employee will rise to $129,800, a growth rate of 4.4 per cent per annum. That is a few thousand dollars less than would have been the case without the restraint program. The PBO complains, however, as it has in the past, that it has not been given sufficient information about how the restraint program is being implemented, or its impact. "As such, parliamentarians do not have the resources with which to determine areas of priorit
  • JJ Igra on 12 Dec 12
     
    Questions: With the government cutting off public servant, how will this effect the distribution on public services provided to Canadians Is there other alternatives the government can consider rather than laying off public servants to decrease the government's expenditure?
Brijesh Patel

Drowning In Debt? - 2 views

www.theglobeandmail.com/...article7354916

shared by Brijesh Patel on 17 Jan 13 - No Cached
  • Some basic tips: “Don’t add any more to your debt,” Mr. Schwartz said, “Put your credit cards away. Stop using your line of credit. Live on cash or debit.”
  • Canadian borrowing levels have hit record levels, with household debt-to-income ratio recently reaching a high of 164.6 per cent, according to Statistics Canada.
  • But consulting a trustee, which comes with no charge, doesn’t always mean filing for bankruptcy, he explained. Trustees can help set budgets, steer consumers toward consolidation loans, mortgage refinancing or consumer proposals as a way to climb out of debt, he said.
  • ...1 more annotation...
  • Pay down the debt with the biggest interest rate first, or select a small debt, and pay it off.
  • Brijesh Patel on 18 Jan 13
     
    Pay down the debt with the biggest interest rate first
  • Brijesh Patel on 18 Jan 13
     
    In 2011, 77,993 consumers filed for bankruptcy
Brijesh Patel

Consumer Debt loads grow at fast pace in 2 years - 0 views

www.cbc.ca/...transunion-debt-credit.html

debt hits new ratio

shared by Brijesh Patel on 18 Jan 13 - No Cached
  • Brijesh Patel on 18 Jan 13
     
    Canadian debt loads grew at their fastest pace in two years during the summer
  • Brijesh Patel on 18 Jan 13
     
    Non-mortgage debt jumped 4.6 per cent
  • Brijesh Patel on 18 Jan 13
     
    Household market debt has risen to 163% of disposable income
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