The Canadian consumer is becoming increasingly more indebted, as high inflation and interest rates erode away at pocketbooks across the country. Total household credit liabilities increased 0.2% in April to $2.85 trillion, in line with the overall debt growth reported in March.
But, the data from Statistics Canada indicates that the use of credit cards by households is substantially increasing, even though mortgage debt growth is showing signs of slowing down. In April, non-mortgage loan debt rose 2.8% year-over-year, while credit card debt with chartered banks was up 1.5%, or $1.5 billion.
The data also reveals that mortgage debt increased by 0.2% in April; however, on an annualized basis, the growth rate of household mortgage debt was at its slowest since 2018, rising by only 2.6%. This increase occurred as existing home sales ascended for the third consecutive month, with both sales volumes and average sale prices seeing a rise.
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With the policy interest rate rising to 4.75% in June, even Statistics Canada is warning of potential increases in debt pressures in the upcoming months.
Information for this story was found via Statistics Canada. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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