Toronto real estate debt has been soaring, but how much other debt do households have? Equifax numbers from the Canada Mortgage and Housing Corporation (CMHC) show that the majority of debt is real estate related, but there’s still a whack of consumer debt. When broken down into payments, consumer debt requires nearly as much cash to service.

About The Numbers

Today’s numbers are from Equifax, and will be a low-ball estimate of household debt. To start, Equifax’s numbers for outstanding mortgage debt is about 20% lower than Bank of Canada (BoC) numbers. Neither include private lending, where the debt is held by anyone from a big company, to mom and pop. That said, these numbers are the most comprehensive ones broken down by region. Just remember that as large as these numbers are, they’re underestimating the total.

Toronto Households Have $384 Billion In Debt

The majority of household debt in Toronto is tied to real estate. Households owe over $384 billion at the end of 2017, the majority of it tied directly to primary mortgages. Mortgage debt accounted for $268 billion of those dollars, about 70% of the total debt. Home equity line of credits (HELOCs) were the second largest segment of debt at $45 billion, a touch over 11.8% of total debt. The majority of debt is tied to assets in a cyclical industry – what could go wrong?

Most debt is related to real estate, but there’s still quite a bit of consumer debt. The largest segment outside of real estate is credit cards, which accounted for $17.98 billion of the debt pile, about 4.7% of total debt. Auto loans added up to $11.96 billion, 3.1% of total debt outstanding. Regular lines of credit represented $8.58 billion, 2.2% of the total debt outstanding. Other, which is an aggregate of all other forms of debt, came in at $31.28 billion, 8.1% of the total debt. The majority of debt might be tied to real estate, but $69.81 billion in consumer debt is nothing to sneeze at.

Greater Toronto Debt By Type

Total debt held by households in Greater Toronto, at the end of the fourth quarter of 2017. In Canadian dollars.

Source: Equifax, CMHC, Better Dwelling.

Toronto Households Pay Over $2.79 Billion Per Month To Service Debt

All of this debt isn’t just a pain on household balance sheets, it requires a huge amount of cash to service. Greater Toronto households are scheduled to pay $2.79 billion per month to service the debt. Households pay $1.52 billion towards mortgages, representing 54.4% of monthly payments. HELOCs need $120 million, representing 4.3% of monthly payments. Real estate related debt is over 80% of total debt, but less than 60% of monthly payments go towards servicing it.

The rest of the monthly scheduled debt servicing goes towards consumer debt. Credit cards need $348.93 million, representing 12.5% of monthly payments. Car payments need $319.32 million, 11.4% of total monthly payments. Line of credits need $122 million, 4.4% of monthly payments. The mystery debt aggregate marked as “other” requires $367 million, the remaining 13.1% of the monthly payments. For those keeping tabs, consumer debt consumes almost half of all cash that goes to debt servicing.

Greater Toronto Scheduled Monthly Payments By Type

Total monthly debt payments scheduled for households in Greater Toronto, at the end of the fourth quarter of 2017. In Canadian dollars.

Source: Equifax, CMHC, Better Dwelling.

Record low interest rates allow people to pay more towards principal borrowed. However, it also results in people taking out more debt than typical. The issue isn’t a huge problem when interest rates are low, but as they normalize, households will start to feel the pinch. The BoC warned earlier this month debt is concentrated by region, and demographic. Households with high levels of debt will be “highly vulnerable” to rising rates.

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