Canadian real estate buyers aren’t the only ones being tight with the loans. Bank of Canada (BoC) numbers show household debt growth has fallen to the lowest level in more than 30 years. The decline in growth is so low, it’s something Canada hasn’t seen outside of a recession.

Canadians Owe Over $2.15 Trillion In Household Debt

The balance of outstanding household credit reached a new record high. The balance hit $2.158 trillion in October, up 0.25% from the month before. The balance is now 3.5% higher than the same month last year, which sounds decent. However it’s unusually low for Canada’s debt driven economy.

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.

Most of our readers were barely out of diapers, if they were even alive, the last time the numbers were this low. Household credit growth last fell to this number in 1982, and remained at this point for less than two years. While the two periods look the same, they don’t resemble each other… yet at least.

Interest rates and unemployment were very different 36 years ago. First, growth fell to this level six months after interest rates increased to an eye watering 21.03% in July 1981. Second, unemployment in Canada reached over 12%, the highest levels since 1934. Obviously, that’s not what we’re seeing in Canada right now. However, credit is now a leading indicator since our economy is so leverage dependent these days. So this could be a sign of things to come.

Canadians Owe Over $1.53 Trillion In Mortgage Debt

The balance of mortgage debt owed by Canadians reached a new all-time high. The balance reached $1.533 trillion in October, up 0.22% from the month before. The annual pace of growth is now 3.17%, the lowest we’ve seen since 2001. If you’re looking for more information on this number, check out yesterday’s piece.

Canadian Household Debt Outstanding In Dollars

Total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Canadian Consumer Debt Rises To Over $624 Billion

The total amount of consumer credit reached a new high. The outstanding balance reached $624.4 billion in October, up 0.33% from the month before. The annual pace of growth reached 4.31%, the third month we’ve seen this number rise. The increase in the number is relatively small however, and is still in a downtrend. The down trend began right around the time same time as mortgage growth.

Canadian Household Debt Change

Annual percent change in debt held by Canadian households.

Source: Bank of Canada, Better Dwelling.

Mortgage stress tests are being blamed for the decline in growth, but that doesn’t make sense. Consumer credit also slowed around the same time, both about 6 months before stress tests. More likely we are seeing households loaded with debt, not able to push growth much higher. In fact, they’ve loaded up on so much debt, they’re now acting like we’re in a recession.

Like this post? Like us on Facebook for the next one in your feed.