This Week’s Top Stories: Canadian Households Pay A New Record Amount of Interest, and Hot Inflation Makes Lower Rates Unlikely

Time for your cheat sheet on this week’s most important stories.

Canadian Real Estate

Canadian Credit Card Debt Tops $79 Billion, Interest Rates Hit A Multi-Year High
Canadians are racking up quite the bill on their high interest rate credit cards. The outstanding balance of credit card debt reached $79.17 billion in September, up 4.07% from last year. Even more surprising, the average interest rate was 19.22%, up 1.47% from last year. Outstanding credit card debt is rising much faster than other segments of debt, and households are paying a lot more interest.
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Canadian Households Paid Over $104 Billion In Interest During The Last Quarter
Speaking of interest households are paying, Canadians just paid the most in decades. Interest payments reached $104.96 billion in Q3 2019, up 11.02% from the same quarter last year. To give it a sense of scale, Canadians paid $405.32 billion on just interest, over the past year. If interest payments were a province’s GDP, it would be bigger than Alberta, and just behind Quebec.
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British Columbia Real Estate Leads Canadian Sales Higher
Canadian real estate sales slowed in growth, but they’re still moving much higher. CREA reported 37,213 unadjusted sales in November, up 11.3% from last year. This number is a big jump, but still 2.31% lower than the number of sales seen in November 2017. Big growth, but not quite at levels seen a few years ago. Although growth is coming in fast, so that could change next year.
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Canadian Real Estate Prices Experience Smallest Growth Since 2008, Dragged By The West
Nationally, Canadian real estate prices are seeing growth – just small growth. Prices across Canada are up 0.16% in November, and up 1.43% from last year. The 12-month growth is the lowest for the month since prior to the Great Recession. Other than the November 2008 print, we haven’t seen anything this low in the history of the index. Most of the drag on prices was concentrated in Western Canada.
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Canadian Inflation Rises To Highest Level Since 2009, Making A Rate Cut Dangerous
Canada’s CPI-Median, a core measurement of inflation, is running a little high. The rate hit 2.4% in November, up 26.31% from the same month in 2018. The level is actually the highest we’ve seen for the index since March 2009. The higher this number goes, the harder it’s going to be to cut rates. This one needs more than a single paragraph to dive into.
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