Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canadians Are Back To Spending A Record Amount Of Income Servicing Debt
Canadian households are back to spending a record amount of their income on debt. The household debt service ratio (DSR) reached 14.96% in Q3 2019, up 1.70% from last year. There was a mild pullback in the previous quarter, but it’s back to a new record high. This is the most income Canadians have spent to service debt in at least 30 years, and most of the recent rise is due to interest paid.
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New Mortgage Lending Reached A New Multi-Year High For September
Canadians borrowed a lot of cash to buy houses according to the most recent numbers. Lenders advanced $38.46 billion for mortgages in September, up 41.58% from last year. Last year was unusually slow, but even so the actual dollar value is robust compared to any period.
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Canadian Banking Regulator Warns Members To Prepare For Rising Vulnerabilities
Canada’s banking regulator is asking the Big Six to put aside more cash for a rainy day. The domestic stability buffer (DSB) will be raised to 2.25% in April 2020, rising over 50% in just over a year. DSBs are an extra cushion the Big Six are required to maintain, and are essential to the operation of the general economy. The percent is raised as regulators see more risk to the financial system. In this case, they cited household debt as one of the primary risks, and a deteriorating global macro environment.
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Canadian Unemployment Levels Rise Everywhere But The Maritimes
The rate of unemployment is rising across Canada, with only the maritimes seeing improvement. The rate reached 5.9% seasonally adjusted for November, up 0.4 points from a month before. This is the highest level it’s been since August 2018, just over a year ago. For context, every 0.5 point increase from 12-month lows has been known to kick off a recession in the US. The overall rate is still very low, however this indicator tends to rise quickly.
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Uh Oh… Canadian Consumer Credit Sees Slowest Growth In Almost 4 Years
Canadians aren’t interested in borrowing for anything other than a house, apparently. Consumer debt outstanding reached $640 billion in October, up 2.7% from the same month last year. This is the lowest level of 12-month growth we’ve seen since January 2016. A decline in consumer credit growth is odd, since household debt growth is accelerating.
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