Canadian non-mortgage debt shows decline

Canadian non-mortgage debt shows decline

Canadian non-mortgage debt shows decline

debtNew data on consumer credit suggests Canadians are becoming more cautious  about making purchases that involve taking on debt.

The analysis by TransUnion Market Trends shows average consumer debt in  Canada, excluding mortgages, fell by two per cent to $26,935 in the first three  months of 2013 from the fourth quarter in 2012.

While total debt is still 3.5 per cent higher from a year ago, it was the  first quarterly drop since the third quarter of 2011 and the largest since the  firm began collecting the data in 2004.

TransUnion vice president Thomas Higgins says while the fall-off was  significant, it is still too early to declare a trend. He notes that the 2011  decline was quickly followed by rapid increases in 2012.

The Bank of Canada has welcomed the general trend to more frugal finances  among households, particularly in mortgages, which make up for the vast majority  of debt held by Canadians.

The bank continues to warn, however, that Canadians could be caught out once  interest rates start rising.

Higgins says the average Canadian pays about $1,398 in interest each year on their lines of credit, but that would rise by $350 if rates rose by one percentage point, and by $699 if rates rose two points. With interest rates at rock-bottom levels, TransUnion says delinquency rates  remain low for all credit products.

On consumer debt — which includes credit card debt, lines of credit,  instalment and car loans — all provinces except British Columbia posted a  quarter-quarter decline in the first three months of 2013. In B.C., credit rose  3.7 per cent.

Management

By |2017-01-04T01:02:26+00:00June 5th, 2013|Economy|0 Comments

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