Canadian Household Debt Tops $2.48 Trillion, As Growth Hits Highest Level Since 2017

Canadians have no problem borrowing money, they just won’t do it for anything but a house. Bank of Canada (BoC) data shows household credit reached a new record high in April. The rate of growth was the fastest seen in nearly half a decade. Canadian housing mania has few people spending on anything but a house though. Mortgage credit recently grew to the largest share of household debt since the early 90s.

Canadian Households Owe Over $2.48 Trillion In Debt

Canadian household credit reached a new record high, and did it at the fastest rate in years. The balance of household debt reached $2.48 trillion in April, up 0.79% (+$19.52 billion) from a month before. This brought the 12-month change to 5.34% (+$125.89 billion) higher. It was the highest rate of annual growth for household credit since 2017, driven by housing.

Canadian Household Credit

The outstanding balance of household credit in Canada, in trillions of dollars.

Source: Bank of Canada; Better Dwelling.

Mortgage Debt Is Now 68% of Household Debt, The Largest Share Since The 90s

Mortgage loans are responsible for most of the credit growth. They represented $1.70 trillion of the debt in April, up 1.05% (+$17.74 billion) from a month before. Compared to 12-months ago, this is 7.75% (+$122.31 billion) higher. We’ve already talked about mortgage debt this month, so we won’t bore you by repeating those deets. There are a couple of points worth calling out in the context of total household credit though.

Canadian Household Credit

The outstanding balance of household credit in Canada, in trillions of dollars.

Source: Bank of Canada; Better Dwelling.

Mortgage credit is rising fast, and is now the largest share of household debt in a generation. The 7.75% annual rate of growth for April is the largest recorded since 2010. The outstanding balance now represents 68.4% of total household credit. That makes it the largest share since 1994. To say this segment is booming would be an understatement.

Consumer Credit Is Showing Less Than 1% Growth

Consumer credit, which is all non-real estate lending, isn’t growing nearly as fast. The balance reached 78 billion in April, up 0.23% (+$1.78 billion) from a month before. Compared to 12-months ago, this is only 0.46% (+$3.59 billion) higher. Almost nil growth over the past year, which would be negative in real terms. The monthly growth was nearly half of annual growth, which shows a recovery is on the horizon. Too early to tell, but worth keeping an eye on.

Canadian Household Credit Growth

The 12-month percent change in the outstanding balance of household credit in Canada.

Source: Bank of Canada; Better Dwelling.

Low rates should stimulate all household borrowing, in turn stimulating the economy. After all, they apply to all kinds of credit, not just mortgages. It’s so far failed to stimulate regular consumer credit growth though. Instead, the only thing people are willing to take out debt for is a house. If this doesn’t balance itself soon, consumer spending will be neglected. That can lead to a further concentration of the economy on housing.

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  • Holton 3 years ago

    In the modern world, money is debt, debt is money. We printed tons of money during pandemic hence created tons of debt. That is exactly why prices will continue to go into real estate. Because that newly created debt/money takes time to propagate through the economy.

    The fact that debt increased if one understands economics should tell you real estate prices will continue to increase, not decrease.

    Read this post again until you understand this dynamic. Or you will be forever on the wrong side of economic decisions.

    • P 3 years ago

      its not first time in the history when we are printing a lot of money!
      mid 2000 in the US and late 1980 s in Canada

    • D 3 years ago

      Up until it’s $5 million for a crackshack.

    • Canaduh 3 years ago

      Most folks understand and agree with your argument, and its true to a large extent. By Godel’s incompleteness theorem, however, your claim is intrinsically subjective as is the rest of thr community’s. The extension of this is that there are other claims that use the same or different data (even different samples) to draw different conclusions. This is a form of parsing ambiguity. For example, M2 velocity statistics show a drive towards specific asset inflationary trends that are not necessarilly supported by fundamentals. Your claim is true, however in a dynamic system is not necessarily true given all possible configurations of the system at all points in time. No one knows the future, however it’s helpful for the community to get all narratives on the table so we can calculate probabilistically, rather than with certainty, what state of the world we are in at any one time.

    • ivers 3 years ago

      no knowledge of the debt market

  • D 3 years ago

    Debt donkeys are paramount to any modern economy.

  • Doomcouver 3 years ago

    Removal of stimulus should balloon the debt even further. Canadians have shown themselves more than willing to subsidize their cost of living by massively growing their debt burden. It’s going to completely destroy the economy when debt levels start to mean-revert at some point.

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