Canadian racked up another record for debt. Bank of Canada (BoC) numbers show households added billions to the balance of debt April. Despite the achievement, the growth rate of debt is starting to decelerate as higher interest rates bite. The deceleration is good news for household budgets, but not great for Canada’s debt driven economy.
Total Household Debt Reaches Over $2.1 Trillion
Total household debt printed a new record in April, racking up another few billion over just 30 days. The total outstanding balance of all household debt reached $2.132 trillion, an increase of $2.964 billion from the month before. The total increase is $99 billion from last year, an increase of just over 4.9%. Let’s break these numbers down to see where Canadians are spending their hard yet-to-be-earned cash.
Canadian Household Debt Outstanding
Total debt held by Canadian households, in Canadian dollars.
Source: Bank of Canada, Better Dwelling.
Canadian Mortgage Debt Reached Over $1.528 Trillion
Residential mortgage debt accounted for the vast majority of the increase of debt. Mortgages accounted for $1.528 trillion, an increase of $2.48 billion in April. Households borrowed an extra $71.8 billion from last year, an increase of 4.9%. Mortgages represent the largest segment of debt, as well as dollar volume growth. If you’re looking for more on the mortgage debt, we broke these numbers down yesterday.
Canadian Consumer Debt Is Over $604 Billion
Consumer debt did not hit an all-time high, but is pretty darn close. Consumer debt represented $604 billion of the total debt, an increase of $478 million in April. Households added an extra $27.2 billion in debt from last year, an increase of 4.7% from the year before. Consumer numbers are just $1.2 million away from the all-time high hit in December 2017.
Canadian Household Debt Change
Annual percent change in debt held by Canadian households.
Source: Bank of Canada, Better Dwelling.
Higher Interest Rates Are Likely At Work
In July 2017, the BoC hiked interest rates for the first-time in seven years. Generally speaking, the hike is meant to cool borrowing, but takes six to twelve months to see the impact. Both mortgage and consumer debt sync and head lower together in December – nearly 6 month afterwards. Either consumers got tired of borrowing at the exact same time, or interest rates are working exactly like they should.
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I want higher rates, but if the BoC raises tomorrow, they’ll decimate the economy. Now we need to make the decision to weaken the currency down to US$0.50, or have the economy decimated by a hike.
We import a fair bit. Not sure if a 0.50c dollar will be that much better for the economy. Also don’t want our friendly commander in chief to the south to start giving us the currency manipulator tittle. , at least not until we have a deal in place for NAFTA. And can we get there without inflation getting too out of hand which could cause more aggressive hikes later on down the road?
I have no idea what the solution is, but definitely not envious of Poloz position. Toughest gig in Canada right now……. Does he want to be remembered as the man who crashed the housing market/economy or the man who destroyed the currency/economy?
And what the weak currency scenario will do to inflation / bond yields / market interest reates? BOC facilitated a perfect storm, anyone who thinks that anyone in control now is delusional. Welcome to money markets.
Get ready folks, this will be the beginning of a very important lesson in the history books.
lol! I’ll always remember where I was when I read that credit began decelerating.
Time of Death for the Canadian economy: 10:22AM.
It’s coming for sure. Funny, just remembering this article and saw that it was from a full year ago. Kind of feels like increased interest rates and perhaps insane carbon taxes at the pumps have got us down to a burger and fries away from not meeting our obligations…. https://globalnews.ca/news/3434447/over-half-of-canadians-are-200-or-less-away-from-not-being-able-to-pay-bills/
Well done. The public has no idea what the hell is really going on in Canada…bloody clueless….enjoy some facts…
Just a little backgrounder, to gain some perspective… Liberals – This is the party of massive government growth and debt under Trudeau part 1 (daddy), Lalonde, changing our banking system, the way we borrow money and from whom, the party of forcing a new flag on the nation, forcing bilingualism (French) on the country while allowing English to be banned (allowing bills 22, 178, 101…) in Quebec, forcing multiculturalism, renaming our founding constitution the BNA act and forcing a french style charter upon the country signed only by people from Quebec (Trudeau, Ouellette, Chretien)… The party of adscam, the funneling of millions into Quebec, Shawingate, hotel burning, contracts on napkins, cash changing hands in brown paper envelopes in Quebec restaurants, the party of the most corrupt, slimy, sleazy province in the country ( see MacLean’s magazine, Quebec corruption), where mayors all across the province are being charged with corruption, fraud, money laundering, bribery… ongoing trials as we speak, the party of equalization (the stealing of your money and funneling billions into Quebec, every year for over 50 years now with no change in sight …), the stealing of farm land (Read – The tragedy of Quebec)…I could go on for hours with facts…the Liberal party of Canada has a long , long history, a pattern of greed, slime, deception and corruption dating back to the 1960s. A few of clips below for proof…quotes below…
https://www.youtube.com/watch?v=3WTyYNjPTmU
https://www.youtube.com/watch?v=5iGZE6zxoKQ
https://www.youtube.com/watch?v=ui_XgfFceYc
https://www.youtube.com/watch?v=HA0-psDcdnk
If only the public fully understood what is happening to them ,if they only knew what these French language radicals were really up to, and that is the problem, people really don’t understand what’s going on, what these french language bigots are doing to all levels of government across the country…what the goal really is…see below and pass it on, nothing but the truth. These people are the most racist, bigoted, corrupt, xenophobic people in all of North America. If the world only knew what was going on in Canada, what the “French” (metis) were really up to…along with the racist anti-English language laws in Quebec a la bills 22, 178, 101…they have bragged about taking all of Canada and everything seems to be going as planned…
”first Quebec, then the rest of the country…one step at a time…” PET,
“how to take over a country through bilingualism…” SD
Quebec has been robbing Canada blind for decades now. Ever since Trudeau and his gang of anti – English language, anti – BNA “French – metis” bigots from Quebec arrived in Ottawa in the 1960’s, they have been funnelling billions upon billions in grants, subsidies, equalization payments… into Quebec every year = more and more debt…an absolute disgrace. And how do they say thanks in french? Well try decades of anti-English language laws like bills 22, 178, 101…nice eh?
Go learn our proud, real BNA and UEL history. These were the builders of our country since 1763. Not this phony, revisionist lie, this bilingual, multicultural, 2 founding nations, linguistic duality lie, propaganda, spin that we’ve been living with since Trudeau, and kebec forced this upon the nation. We’ve been part of the British Empire since 1763 and officially an English speaking country for over 200 years…just a fact.
It’s not just going on in Kebec. Its happening all over the country. From the confiscation of farm land in the 1940”s (The tragedy of Quebec) to the removal of the Red Ensign in Quebec City in 1950, to the removal of the Red Ensign in Ottawa in 1965 to the enforcement of bilingualism in Ottawa in the late 60’s, 70’s…to the nightmare that Canada is now living with (the charter and everything connected to it) its all going as planned folks.
Lies, deceit, spin…decades of it. People really have no idea what this man Trudeau and his cronies form Kebec did to Canada. The changes have been incremental …its been decades of propaganda, brainwashing, lies…subtle and not so subtle at times… About 40 years of this 2 founding nations, linguistic duality, bilingualism, Quebec is French…BS. None of this existed before Trudeau and his gang of bigots came to power.
See the quotes below…they knew what they were doing from the start…and this has been exposed in many books, please don’t believe me, go read a few, – The monstrous trick, His pride our fall, Enough, Bilingual today French tomorrow, Conspiracy of two, Conning the Canadians, The tragedy of Quebec…and many more.
.” ….Given these facts, should French-speaking people concentrate their efforts on Quebec or take the whole of Canada as their base? In my opinion, they should do both; and for the purpose they could find no better instrument than federalism”, Pierre Trudeau,.
“I cannot swear it but I think we were thinking to ourselves,… we are a small group, Trudeau, Pelletier, Marchand, Lalonde, Chrétien, myself and a few people in the civil service, say 50 all told…we were bringing off a revolution. We held the key posts. We were making the civil service bilingual (French), kicking and screaming all the time”. Jean-Luc Pepin, Minister of Industry, 1970.
50 years of spin, lies…thats what we have got. They are changing the names of towns, streets, counties, bodies of water, riding names…and I’m not taking about kebec any longer. It’s now going on all over the country; it’s a mess in Ottawa where they name things after anti-English language bigots and racists all the time. They are slowly wiping out our English, Scottish, Irish, United empire loyalists history. Just like they’ve been doing in Quebec for the last 5 decades (bills 22, 178, 101…)…This is one of the main reasons we are not teaching any history from 1760 to 1982 in our schools any longer.
These racist people control government, the curriculum, our money…we get a daily dose of spin, lies and propaganda. Its just a daily dose of Champlain, Riel ( a murderer, hung for treason…) Cartier…all French history…no Wolfe, Amherst, Murray, Nelson, Cornwallis, Fraser, Wellington, Dorchester, Waterloo, Durham…no Red Ensign…
More quotes below. Our flags for over 200 years was the union jack and red ensign until a bunch of liberal parasites mostly from Kebec got rid of it…this has to be taught…this is our real history…
“First Quebec, then we take over the rest of the country, one step at a time…through bilingualism…” PT, “How to take over a country through bilingualism…” SD. How ? First comes the right to communicate with gov’t in a minority language (ie French),then comes bilingualism, then comes the right to work in the language of choice(ie French), then comes a bilingual boss,(ie French) then comes a exclusively French department and on it goes until its all French. Its happening all over the country, Ontario, New Brunswick…That’s what’s really going on.
“My roll as Secretary of State of Canada is first and foremost to ensure that my French compatriots in Canada feel with deep conviction, as I do, that this is their country and that it reflects their image”. “I too had some difficult years as a politician; I’m still having them, in fact, because everything we undertake and everything we are doing to make Canada a French state is part of a venture I have shared for many years with a number of people”.
“You know the idea, the challenge, the ambition of making Canada a French country both inside and outside Quebec — an idea some people consider a bit crazy, is something a little beyond the ordinary imagination”. – Serge Joyal, Secretary of State – Page 2 ‘ENOUGH’ by J.V. Andrew. – Serge Joyal – Now in the Senate.
Wake up people!!! Spread the word please.
That’s not that bad for debt levels, people are over reacting. It works out to less than $60k per person, just over half a year’s worth of pay. Millennials need to quit whining.
Not bad compared to what?
That’s assuming everyone has debt. What about those of us who are living debt free, what percentage does that make up?
Not only are you assuming that everyone is in debt, but it seems like you’re counting the pre-18 population?
Nice troll mitch…subtle…me likey
60k per person if you assume everyone is in debt, everyone makes the same salary, all money owed is divided up evenly across every city in Canada.
Oh yeah, also that is also excluding the idea of perhaps theres other money owed on Cars, Credit cards, maybe even money owed on new furniture, the whole list goes on.
average canadian apparently does not have an extra 200$ to use towards any unexpected emergency…… But yeah you are right dude, 2.13 Trillion owed is not that bad actually
So what are you saying,a family of four owes 240 tho and the average income is 100 tho a year.I don’t think so.
Poloz needs to resign! He is not acting in good faith and is just trying to protect Trudeau and himself…
Raise rates now, follow our southern neighbour and grow a pair. A recession will arrive regardless of what you do!
Poloz was appointed by Harper. Didn’t start the low rate environment here, but should have started raising rates sooner (maybe easier said than done considering the FED was still on hold). I think his biggest mistake was slashing rates further when Oil blew up. Should have let us face that recession rather than kick the can down the road to where we are today. Prices in VAN and Toronto went crazy in 2015-2017 (after the cut). Would have been wise if OFSI had implemented B-20 back at the start of 2015 when rates dropped to .5. Credit pumps in China /US rates/ QE also had spillover effects for the rest of the world.Individuals who jumped into the debt orgy to make a quick buck should also not be let off the hook.
Anyway lots of blame to go around, I’m sure in hindsight the experts will all be able to tell exactly what went wrong.
Shoulda coulda woulda………. Too late now.
Yo Grizz. I think you’ll agree that most people, 95%, don’t differentiate between departments of government and who appointed who when; the BoC is under ‘liberal control’. That’s what the media and the overall narrative will reinforce. I was thinking about this a little more and how this may playout politically. Economy gets nailed, I think that is inevitable at this point. Everyone will hold Baby J and the Libtards accountable. This will usher a long era, 2-4 terms minimum of the Fapservatives or maybe 1% chance of the NDPoopers( we all know Layton was the only chance of the latter formering a federal government let’s be honest.). What will ultimately also shift is the millennial affinity for liberal beliefs; liberals fucked canada by not being fiscally conservative/responsible. They are ‘resetting’ the view of conservatives in the minds of millenials because as we all know, if you’re under 30 you don’t give a fuck about ‘old white man problems’ and the sort of shit conservatives seems to base their identity on (Two dudes kissing, why do I even care? It’s 2018.). If you look at the spread of right wing/populist influence in eastern europe all of the ascension can be tracked back to economic conditions which created an environment of fear/hate/racism. Whatever…BD4L.
If you think millennials base their political identity on fiscal rather than social policies, I got a fidget spinner to sell you.
Millenials have been been given the luxury of taking up social issues because they’ve only known, for their late teens and ‘adult years’ the golden age of low rates and growth. When you struggle, giving a shit about the plite of transgendered hamsters in Peru goes to the back. Everyone I know has always been able to make bank and get a job; maybe it isn’t the job they ‘think’ they should have at the ripe old age of 22. No one have ever been hurting; it’s just the FOMO/Facebook culture. Now the pain is coming. Once they experience a downturn, get fired or the people around them and watch their parent’s lose their retirement for the second time in a decade I’m pretty sure their opinion of ‘help everyone, life is good’ will become a little more jaded. And Yes, I would like that fidget spinner thank you very much! BD4L.
I think your right about that Blue. The last time the NDP got into power in Ontario was 1990., fight as the last housing bubble was blowing up and we were entering a bad recession. This was also when the bulk of the boomer generation was around the same age as the millennial populace today. Pretty young back then so I cannot speak to how much worse they made things, but the ultimate result was a Mike Harris government and a boomer gen that wouldn’t touch the NDP on mass ever again.
I’ve been curious why the conservatives ran Doug Ford when Brown got clipped. Think Elliot or Mulroney would have been a shoe in……….Did they get greedy after seeing the polls? Or did they maybe want to run a fool so they would have an excuse when the economy tanks/ maybe even hand in to the NDP so that they are the ones holding the bag………tinfoil theories I know
Grizz, it’s not really Poloz who is at fault, it’s the whole economic theory and inflation targeting method adopted by leading central banks.
BoC must keep inflation within 1-3% window and ideally at 2%. If you look at the graph inflation in 2013 was less than 1% and we also had mini-recession in 2012-2013. No economy theory will advice tightening in this situation. In fact it will advice you to ease (that’s what Poloz did)
https://tradingeconomics.com/canada/inflation-cpi?continent=europe
So Poloz is just doing its job of controlling inflation and inflation data for 2016-2018 proves that rate decision he made in 2015 were correct.
Yes, low interest rates inflated our housing market and debt levels, but again, its an issue with economic theory, maybe BoC should target something other than inflation but a solid economic theory must be created for that first.
Not saying only their fault but even Carney was worried about the effects of low rates on the housing market before he left. He was worried about the housing bubble back in 2013-2014, stating that it is important households do not over indulge on debt during low rates. They are all smart enough to realize what was going on. Sure they have their mandate, but to follow it exactly when they realize that a far bigger monster is building due to their mandate, is there not some guilt there? Did we need to go from 1% to .5% or could .75% maybe have worked. Could they have raised a bit more aggressively at then of 2013 into 2014 before Oil blew up so that their would be more of a buffer to cut from?………. Guess they are just soldiers following orders.
Maybe a bit more coordination between governments and a more vocal BOC governor would have gotten the stress test implemented sooner.
I agree though that a lot of their measuring sticks and methods are outdated. Last few blow ups have been blamed on keeping rates too low for too long but then the solution is to lower rates even futher and to hold them down for longer
Tough question. Someone has to be blamed for all that mess at the end – that’s for sure.
I think you are right, coordination is the key. All agencies must act together in order to prevent speculation in the market.
But the reality is that each agency is only looking at its own set of indicators and they don’t interact efficiently or react too slow. No one is really overseeing the whole picture or actively monitoring speculation developments in the RE market.
As a result every 7th Canadian now is a landlord(as per CIBC’s poll), some shady foreign money laundered through Canadian RE and prices & debts are through the roof.
For example: let’s say BoC will hold its rate now and CAD will tank as a result. Reasonable government would immediately focus on monitoring foreign investment activity and if it’s unhealthy (speculative) react immediately to curb it.
Will our government do that? I doubt it. Is it beyond BoC’s power? Definitely.
Poloz is serving Trudeau at the moment, its in both of their interests to keep rates low.
Rates need to go up, yet they will not with these two morons at the helm.
With Canada’s debt-to-GDP ratio hovering around 100%, sales taxes will be going up!
Only a housing crash will make houses in and around the big cities affordable again.. unless the average income doubles in the next year.
The government needs to find more ways to tax speculation on housing.. Instead they make it easy for greedy speculators to drive up house prices. A home is a longer term investment that you live in!
Forget mortgages, look at the rates on auto loans! Yikes. Thousands in interest added that was not there in 2016. Shopping for a car is now depressing.
Sorry guys you keep talking about the coming recession and I also read the last few days a couple of articles in different newspapers expecting a recession in 2020 but at the same time many bank executives are talking about a healthy labor market and low unemployment currently in Canada. So who to believe?
Oh Willy, I thought you’d left me. I shed a tear. Took to the drink. Kicked the habit and now I’m a christian missionary in Kenya as I found Jesus, super chill guy but smells a little, and wanted to turn my life around. Funny how you answered your own question with a question; when does that happen outside of Sherlock or Law&Order? So ‘the media’, who we all know is on top of the things that matter and called the housing downturn months before it happened (how thick is the sarcasm? like triple thick thick) is saying a recession is coming in 2020 BUT because some bank executives, essentially the one group of people you can trust to help the 99% get by, are suggesting everything is hunky dory because the labour market is maxed out (fyi: this generally precedes a recession as there is low supply and high demand)? Sorry, I’m a little slow so I’m trying to unpack what you’re asking…can you help me understand? Maybe with some examples and link to some hand drawn sketches you’ve pasted around your room a la Homeland. See you again Willy. Yes I know I can be a prick. BD4L.
So don’t believe the bankers! who knew? (thick, thick) There are just as reliable as the Globe and Mail and Buzz Buzz real estate news.
Unemployment rates look good because of the large number of part time and contracted jobs.twenty years ago all those jobs were full time.we consistently loose full time and gain part time that’s why we now need dental and drug plan because no one is getting it at work anymore .
Great comment Cat. People need to reminded that PT is the new FT with limited security and no benefits. Canada is starting to feel like the US more and more.
Steady march to third world status! You can’t even find good stores anymore, unless dollar stores are good. Eatons, Sears, Bargain harolds, Future shop, zellers, k mart, wool worth, bi-way and the exodus continues ……. soon it will only be Amazon.
I came from a third world country and its sad to see this happening at such a rapid pace in Canada. Our children’s future doesn’t seem all that bright unfortunately.
we need a reset.
RE speculators/condo flippers did really great recently. Unfortunately some of those forgot to pay taxes.. No problem, CRA will fix that issue for them with $600M bill:
https://www.huffingtonpost.ca/2018/05/24/cra-600-million-real-estate_a_23442762/
The last Ontario NDP victory was into a large house price correction/recession. Looks like 2018 is the new 1990
Looks like Grizzly beat me to pointing this out