TD Economics has put together a document with some good news – our debt-to-income ratio is rising more slowly than in the past, but there are some numbers that are still worrisome.
There is some very interesting information here about the pace of borrowing and the levels of debt we’re carrying.
From the document: Over the past few years TD Economics has been warning that Canadian personal debt has become excessive and was an increasing risk to the economic outlook.
Our view has been that debt growth would slow as the Bank of Canada normalized interest rates. However, even without the catalyst of signifi cant interest rate hikes, households have already pared back on their rate of borrowing. Secured debt growth (i.e. housing-related debt) has cooled as Canadian home sales dipped.
Unsecured debt growth (e.g. credit cards, personal loans and lines of credit) is proceeding at a slow pace, suggesting that Canadians have responded to the calls for greater prudence in managing their debt. While the recent moderation in debt accumulation is positive, personal fi nances still appear stretched, implying that consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households.
Click here to read the full document.