Latest TD report: Canadian Household debt a cause for concern indicates that Canadian household debt has tripled from 50% to 150% from the mid-1980's and has reached US levels.
How has this happened:
- Bank of Canada decline in interest rates to combat inflation
- People feeling secure and confident to take on debt because of prosperity and job creation (created for the most part by low interest rates)
- Home ownership rates higher
- Culture of now: buy today even if you can't afford it.
- Credit availability to younger Canadians (consider Tuition fees in Ontario have 207% since 1991 to 2007)
- Credit availability in general (Canada does have securitization of debt instruments and Banks know that line of credits are "sticky" products.)
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2 comments:
Lowering interest rates does not combat inflation. In fact, cheap money will increase inflation eventually.
Hi Brian,
they sure do, thats why the spend millions a year pushing them.
It's hard to believe that the figures you mentioned here have tripled in this time.
Thanks for sharing
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