Canadian Household Debt Hits $2.9 Trillion As Personal Loans Pick Up

Canadian households, the most indebted in the G7, are finally showing borrower fatigue. Statistics Canada (Stat Can) data reveals household debt reached a new record in May 2023. Now larger than the country’s output, the mountain of debt is changing its growth pattern. Households borrowed mortgage debt at the slowest rate since the Great Recession, while personal loans began picking up steam. 

Canadian Households Owe $2.9 Trillion In Debt

Canadian households now owe a debt pile bigger than the country’s gross domestic product (GDP). Household debt showed seasonally adjusted debt grew 0.2% to $2.9 trillion in May, a new all-time record. It doesn’t just sound huge—households owe debt equivalent to 101% of Canada’s GDP. It’s a lot of bills.

Canadian Household Credit Growth

The annual growth rate for outstanding mortgage and non-mortgage credit. 

Souce: Stat Can. 

Canadians are borrowing at a much slower pace these days. Annual growth fell to just 4.0% in May, the lowest rate since January 2021. Prior to 2021, the only other time the rate was this low was in 2019. Slowing credit tends to indicate the end of the business cycle, so Canada is picking up where it left off before 2020-disrupted the global economy. 

Canadians Are Passing On Mortgages, Picking Up Personal Loans

Mortgage credit represented the majority of the outstanding balance. Households accumulated 0.2% more in May, with the segment now representing $2.1 trillion of the balance. Annual growth only came in at 2.0% in May, the lowest rate since December 2011. Higher rates are definitely putting a dent in household debt. 

Consumer credit, the non-mortgage debt representing the remainder, went the other way. Annual growth hit 4.6% in May, the second consecutive acceleration. Stat Can specified this was not due to credit card debt, as one would assume. It was personal loans, which grew at nearly double the average monthly rate. 

Home equity lines of credit (HELOC) debt pulled back, as lenders tighten under regulatory pressures. This may indicate consumers are rotating debt, a work around, but similar concern observed by the bank regulator

Canada has been dependent on debt-driven growth, and a slowdown means a slowing economy. However, slowing credit also means households are taking the opportunity to deleverage. The most highly indebted households in the G7 may need to deleverage to reduce some of the risk they face.

11 Comments

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  • Kate 11 months ago

    Can anyone tell me is there any ceiling we can not overcome ?

  • Scott MacKinnon 11 months ago

    Hmmm. That works out to 75,324.68 for every man, woman and child. Add another 54,545.46 of public debt onto the pile and each and every one of us owe 129,870.14…

  • Mark Bayly 11 months ago

    The left believes debt doesn’t matter which is the majority of the country
    Like religion not very realistic.

    • David Todtmsn 11 months ago

      Well, that depends entirely on which “left” to which one refers. Perhaps one is referring to those lefties at the BOC whose own monitory policies helped flood financial markets with loose credit. If that’s the “left,” then yep, debt doesn’t matter. Until it does.

      If on the other hand, the left to which one refers are the revolutionary Marxists, well that’s a firm nope.

      “[A key] way to circumvent the issue [of a failing capitalism] is by lending money to workers, just artificially extending spending power. What the workers could not get in wages, they could now borrow instead. Central banks over a whole historic period lowered interest rates to make borrowing cheaper. From a high of 19 percent in 1981, the Federal Reserve rate reached a 30-year low of 3 percent in 1993, and a new low of 1 percent in 2003.

      Governments played their part by deregulating credit markets. Banks were required to have less money on hand for every loan they granted (i.e. they could be more ‘leveraged’, 1988-2004); restrictions against banks expanding into investment banking and insurance were removed (1990s); regulations against usury were removed (1970s); and, crucially for how things played out in 2007, 1982 regulations removed restrictions on different types of mortgages, thus enabling the subprime mortgage market.”

      https://marxist.ca/article/2023-another-global-recession-is-coming

    • David Todtman 11 months ago

      If by “left” one means the political parties, the bourgeois oligopoly, and primary media, then yes. They are acting as if debt does not matter.

      However, there are others on the ‘left’–revolutionary Marxists–who have been consistently staunchly opposed to the debt solution.

      “The other way to circumvent the issue is by lending money to workers, just artificially extending spending power. What the workers could not get in wages, they could now borrow instead. Central banks over a whole historic period lowered interest rates to make borrowing cheaper. From a high of 19 percent in 1981, the Federal Reserve rate reached a 30-year low of 3 percent in 1993, and a new low of 1 percent in 2003.

      Governments played their part by deregulating credit markets. Banks were required to have less money on hand for every loan they granted (i.e. they could be more ‘leveraged’, 1988-2004); restrictions against banks expanding into investment banking and insurance were removed (1990s); regulations against usury were removed (1970s); and, crucially for how things played out in 2007, 1982 regulations removed restrictions on different types of mortgages, thus enabling the subprime mortgage market.”
      https://marxist.ca/article/2023-another-global-recession-is-coming

  • Ray 11 months ago

    So many out there are still denying the magnitude of the situation.

    • JY 11 months ago

      2/3rd of Canadians own (lease) their homes with bank payments. The market mentality is of a supply shortage to support such outlandish prices. When the new stock fails to move and the renewals come up with no buyers to bail them out with easy credit. Then we’ll see where things land. IIWII.

  • Lolek 11 months ago

    ‘However, slowing credit also means households are taking the opportunity to deleverage’

    Slowing credit growth seems hardly to indicate deleveraging but rather reduced leveraging.

  • John 11 months ago

    I would like to see the proportion of debt, held by each generation age
    group.

  • Biff Boffo 11 months ago

    Welcome to liberal times, high debt, high cost and high crime.

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