Personal debt level up…uhh, wait.. maybe we made a mistake?!
As you know, I have been very critical about the data that was being put out over the past few months regarding Canada’s personal debt levels.. We were being bombarded with reports and comments about our spending habits… I found it hard to believe that we could go from conservative nation to a casino nation in just a few years…
Sure, there is more debt…. Outstanding mortgage balances topped $1trillion for the first time… but we seemed to be growing at a moderate pace, year over year.. We didn’t have the 20% to 30% increases in real estate prices that we saw in 1987-89, or like our neighbors in the U.S. over the past decade. Meaning there was less chance of a housing bubble or crash.
And what about our assets….? It was hard to find any report about our net worth or assets… There was one report from Ben Tal, Senior Economist CIBC, that didn’t get much notice but we reported it here on December 3rd… here are some of those stats…
-there are 12.5million households in Canada…31% rent, 69% own..
-of the 69% that own, 39.9% have a mortgage and 28.9% have no mortgage.
-69% of homeowners with a mortgage have more than 20% equity in their homes… only 30% have less than 20% equity in their homes.
click here for the full story..
And now for the real stats
Personal debt to disposable income ratio has been reported at 148%… This figure has been recycled more than that gift bag from the wine store you received at Christmas…. and just like that gift bag that gets passed around from friend to friend, it comes with a different bottle… or in this case, different figures and opinions.
Let see how you like this vintage…. Some new reports just came out that should ease our concern about our personal debt levels and average net worth. “Average household net worth has risen to an impressive six times the size of disposable income, up from an average of five times in the 1990s.” That’s a quote from BMO’s Senior Economist, Sal Guatieri… read more here.
What’s this? You mean Canadians are actually investing their money and not spending it frivolously like the Federal Govt has been telling us for the past several months?
It gets better…
Here’s a little more info from CIBC Bank.. Those figures had to do with the personal tax refunds we were getting last year because of the stimulus packages…. “Household debt in the third quarter grew at the slowest pace in nine years, while in the last month for which there is data — October 2010 — it was the softest in 15 years.” read more here.
That’s right, WE ARE SPENDING LESS AND OUR ASSETS ARE GROWING FASTER THAN IN THE 1990’s. … But how can this be? The Federal Govt has been telling us that our personal debt levels are at dangerous levels… and they had to change mortgage rules to slow our spending habits….. Any of this make sense to you?
Here’s an article from Ellen Roseman from The Star that says Canada’s Stock Market has outperformed the U.S. markets for the past 7 years… and we are poised to outperform them for the next 10 years….
Feel good about yourself Canada….. Keep investing… keep borrowing and spending wisely….
Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
I like your style, refering to the last point you made in your opinion whats the fastest way out of any debt? paying it straight off? seeking loan and debt advice?
Fastest way to pay debt is to pay it off immediately.. but that’s not always possible…so loans are needed… the key is to find the lowest interest possible.. Mortgages usually have the lowest rates…. Consolidating debts is a good option…