CONTRADICTIONS OF CAPITALI$M

Statistics Canada says household debt ratio down in Q2 as income grew

The Canadian Press

Statistics Canada says the amount Canadians owe relative to how much they earn fell in the second quarter as disposable income comfortably outpaced the growth in debt and demand for mortgages fell.

The agency says household credit market debt as a proportion of household disposable income, on a seasonally adjusted basis, fell to 180.5 per cent in the second quarter compared with 184.2 per cent in the first quarter of the year.

In other words, Statistics Canada says there was $1.81 in credit market debt for every dollar of household disposable income in the second quarter, down from $1.84 in the first three months of 2023.

Meanwhile, the household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, was 14.79 per cent in the most recent quarter, down from 14.90 per cent in the first quarter, when it hit its highest point since 2019. 

The moves came as seasonally adjusted household credit market borrowing fell to $17.1 billion in the second quarter compared with $20.4 billion in the first quarter as demand for mortgage loans fell to their lowest point since 2005.

The seasonally adjusted total stock of household credit market debt in the second quarter was $2.86 trillion, up 0.6 per cent from the first quarter, while mortgage debt totalled $2.13 trillion.

This report by The Canadian Press was first published Sept. 13, 2023.

Credit balances hit record high in Q2: Equifax Canada

Iva Poshnjari, BNN Bloomberg

Credit card balances hit a record high in the second quarter of this year, according to the latest data from Equifax Canada, even as Canadians pull back on spending amid high cost of living.
 
Equifax Canada’s Market Pulse report on consumer credit trends, released on Thursday, said card balances reached an all-time high of $107.4 billion in the second quarter of 2023, while total consumer debt in Canada reached $2.4 trillion.
 
Even with those sky-high figures, the report noted that heightened borrowing costs are causing consumers to be more hesitant on spending overall.
 
“Canadians are demonstrating a shift in their spending habits due to the current economic volatility,” Rebecca Oakes, vice president of advanced analytics at Equifax Canada, said in a press release.
 
"Non-mortgage debt continued to grow in the second quarter, largely due to substantial growth in credit card balances and a notable increase in debt among subprime and deep subprime consumers,” the report said.
  
HOUSEHOLD TRENDS
 
Credit habits varied across household types.
 
Mortgage holders and high-income segments showed the most slowdown in credit card spending, as they have more flexibility to scale back on discretionary spending to meet their increased credit payment obligations.
 
Meanwhile, consumers with depleting savings are facing an uphill battle when it comes to higher inflation and other expenses, resulting in a continued uptick in credit card debt, Oakes explained. 
 
The average credit card balances per credit card consumer have risen by nine per cent, with the largest increase seen in lower credit score segments, up 13.7 per cent year-over-year, the report showed. 
 
CREDIT CARD SPENDING IS SLOWING
 
Credit card spending as a whole has been consistently growing since the end of 2021. But is finally starting to slow, the report said, due to slowing inflation and rising financial pressure from high interest rate credit products. 
 
“Consumers are becoming more prudent with their credit related decisions,” Oakes said.