Consumer debt continues to rise according to Equifax Canada with total consumer debt including mortgages rising to $1.529 trillion at the end of 2014.That was up 7.7 % from $1.42 trillion at the end of 2013, including a 1.1 % increase in the latest quarter alone. Almost two-thirds of that figure consists of mortgage debt which leaves the other third (or a half trillion) on unsecured debt stemming mostly from credit cards. Overall, Canadians debt-to-income sits at an all-time high of 163.3 %. This means for every dollar we earn, we owe $1.63 in debt.
Aside from credit card debt, two of the fastest growing other types of debt were auto and installment loans, which increased by 5.8 % and 7.2% respectively. Auto loans are pretty self explanatory while installment loans are like mortgages in that they are loans re-paid over a period of time with a set number of payments. Terms may be as short as a few months or as long as 30 years. Installment loans are generally considered to be safe and affordable alternatives to payday loans and credit cards.
The average debt held by Canadians according to Equifax, (not including mortgages), totaled $20,967 at the end of last year and despite concerns about consumer debt, the 90-day-plus delinquency rate has remained the same or even declined in some areas, coming in at 1.09 % nationally – the lowest since 2008.
“The bankruptcy rate has been decreasing since 2009,” Equifax said. “Ontario continues to lead in terms of the rate of decrease of bankruptcies, while there is an increase in bankruptcies in Quebec and the Eastern region.”
Fewer people are declaring bankruptcy than ever before, most like because low interest rates are making it possible for them to keep their heads above water for what may seem like an indefinite period of time. Of course if interest rates rise even a percent or 2, everything could change.