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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.
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 ?
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.
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.
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?
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
Erica Yeo

Why the gap between rich and poor in Canada keeps growing - thestar.com - 0 views

www.thestar.com/...d-poor-in-canada-keeps-growing

inequality canada challenges wealthgap star

shared by Erica Yeo on 16 Jan 13 - No Cached
  • Information technology has eliminated some middle-skill jobs, such as filing and administration, while globalization has seen high-paid manufacturing jobs outsourced to lower-paid countries, Alexander said.
  • globalization has weakened the lowest earners’ bargaining power as their jobs are outsourced to cheaper countries,
  • The gap has likely widened since the recession in 2008 as more companies moved high-paid manufacturing jobs offshore to countries with lower wage rates, the economists also noted.
  • ...3 more annotations...
  • Cuts to government programs, such as unemployment insurance, combined with increases in post-secondary education costs are making it hard for the lowest income Canadians to compete in the knowledge economy,
  • The top 10 per cent of Canadians earned 10 times as much as the bottom 10 per cent in 2008, the OECD said. That’s up from a ratio of 8 to 1 in the early 1990s
  • Calling on governments to do more to close the gap, the OECD said the report dispels the theory that tax cuts will have a trickle down effect by promoting economic growth that benefits everyone
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
Cristina Raileanu

Canadian consumer debt climbs to record levels in 2012 | CTV News - 0 views

www.ctvnews.ca/...ecord-levels-in-2012-1.1093975

canadian consumer record debt levels

shared by Cristina Raileanu on 17 Jan 13 - No Cached
  • That's about the level reached in the United States before the financial crisis.
  • the household debt to income ratio stood at 164.6 per cent,
  • navigated through the risks so far, but the time has come to pay off your bills before that happens.
  • ...1 more annotation...
  • The Bank of Canada is expected to keep its key rate on hold for now, giving Canadians a window to start reducing their debts before costs start to rise.
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