Vancouver

Vancouver Households Have Over $185 Billion In Debt, Most of It Is Real Estate

Vancouver Households Have Over $185 Billion In Debt, Most of It Is Real Estate

Vancouver real estate debt has been soaring, but how much other debt do households have? Equifax numbers from the Canada Mortgage and Housing Corporation (CMHC) show that the majority of debt is real estate related, but there’s still a whack of consumer debt. When broken down into payments, more than a third goes to servicing consumer debt.

About The Numbers

Today’s numbers are from Equifax, and will be a low-ball estimate of household debt. To start, Equifax’s numbers for outstanding mortgage debt is about 20% lower than Bank of Canada (BoC) numbers. Neither include private lending, where the debt is held by anyone from a big company, to mom and pop. That said, these numbers are the most comprehensive ones broken down by region. Just remember that as large as these numbers are, they’re underestimating the total.

Vancouver Households Owe More Than $185 Billion

Greater Vancouver households owed more than $185 billion at the end of 2017, the vast majority due to real estate. Mortgage debt came in at $133.96 billion, representing 72.4% of total debt. Home equity lines of credit (HELOC) debt had $24.58 billion outstanding, representing 13.3% of total debt. Vancouver has almost half the population of Montreal, but more HELOC debt.

Real estate accounts for most of the debt in Vancouver, but there’s still a healthy chunk of consumer debt. The largest single segment is credit cards at $7.14 billion, representing 3.9% of total debt. Auto loans are up to $3.83 billion, 2.1% of total debt. Lines of credit are up to $3.31 billion, 1.8% of total debt. Other, which is an aggregate of all other debt, is $12.2 billion, 6.6% of all debt. That’s $26.4 billion in consumer debt for those trying to keep track.

Greater Vancouver Debt By Type

Total debt held by households in Greater Vancouver, at the end of the fourth quarter of 2017. In Canadian dollars.

Source: Equifax, CMHC, Better Dwelling.

Vancouver Households Pay Over $1.2 Billion Per Month To Service Their Debt

A debt pile of this size requires a huge amount of cash to keep the party moving. Scheduled payments now add up to over $1.2 billion per month, most towards real estate. Mortgages need $720.7 million, 59.8% of cash devoted to monthly debt servicing. HELOCs need $55.64 million, representing 4.6% of monthly payments. Yes, nearly 65% of that huge monthly household debt bill is just real estate.

The remainder of monthly payments are for consumer debt. Credit cards need $135.42 million, 11.2% of monthly payments. Auto loans need $106 million, 8.9% of monthly payments. Lines of credit need $39.61 million, 3.3% of monthly payments.  Other debt categories consume another $147.29 million, which is the remaining 12.2%. Sometimes these numbers are so large they lose meaning and need context to understand how big they are. Vancouver households pay more to service their debt monthly, than nearly half of Oceania countries have in annual GDP. Over $429 million is a lot of cash to spend servicing consumer debt, to say the least.

Greater Vancouver Scheduled Monthly Payments By Type

Total monthly debt payments scheduled for households in Greater Vancouver, at the end of the fourth quarter of 2017. In Canadian dollars.

Source: Equifax, CMHC, Better Dwelling.

Record low interest rates allow people to pay more towards principal borrowed. However, it also results in people taking out more debt than typical. The issue isn’t a huge problem when interest rates are low, but as they normalize, households will start to feel the pinch. The BoC warned earlier this month debt is concentrated by region, and demographic. Households with high levels of debt will be “highly vulnerable” to rising rates.

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3 Comments

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  • Reply
    Dusty Hill 4 months ago

    Key info is missing. Vancouver is 680,000 population strong (or rather weak). So do your math.

    • Reply
      Ian 4 months ago

      Actually surprised they didn’t mention per capita, considering they did in the email. Vancouver is about half the size of Montreal, with slightly more debt.

      They say Greater Vancouver, so we’re looking at close to 2M, but it’s still a very small population considering the size of debt. Considering private lenders are a big thing here, it’s likely much higher.

      • Reply
        Roger Troutman 4 months ago

        2.6M for GVRD.

        You’re right though, there are private lenders on every street and alley in Vancouver. Search ‘scrilla’ or ‘duckets’ on craigslist and prepare to have your mind blown. Think these numbers are bad, actual debt is more likely in the order of kabillions.

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