Canadian households are still into debt, just not if it’s for anything other than a house. Bank of Canada (BoC) data shows household debt reached a new high in September. Most of the debt growth is mortgage related, with the pace of borrowing accelerating. While consumer credit advanced, the pace of growth continues to decelerate.

Canadian Households Owe Over $2.24 Trillion In Debt

Canadian household debt reached a new high, but growth is a little stalled. The balance of household debt reached $2.24 trillion in September, up $82.0 billion from last year. The increase represents a rise of 3.8%, when compared to the same month last year. The pace of growth has stalled, as consumer credit growth continues to slow.

Canadian Household Debt Outstanding, Percent Change

The annual percent change of total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Mortgage Debt Is $1.6 Trillion of The Debt

The vast majority of household debt is tied to mortgages in Canada. Mortgage debt represents $1.60 trillion of the September balance, up $63.8 billion from last year. This represents an increase of 4.2%, when compared to the same month last year. The accumulation in September is also 16.7% higher than last year. Mortgage debt growth is accelerating, despite demands for a looser borrowing criteria.

Canadian Household Debt Outstanding In Dollars

Total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Consumer Credit Growth Is Slowing

Canadians are shying away from consumer credit, which is slowing in growth. The balance of consumer credit reached $639 billion in September, up $18.2 billion from last year. This represents an increase of 2.9%, when compared to the same month last year. Consumer credit growth is around 21.6% slower than it was during this time last year. It’s unusual for consumer credit to slow, while mortgage credit grows.

Canadian Household Debt Change

Annual percent change in debt held by Canadian households.

Source: Bank of Canada, Better Dwelling.

Cheap borrowing normally increases all forms of household credit growth. After all, the goal with cheap money is for all industries to experience growth. However, that’s not what we’re seeing happen at this stage of the market. Instead, mortgage credit is accelerating, while consumer credit is slowing. The divergence hasn’t lasted long historically.

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