With cost of living through the roof, Canadians have plunged deep into debt. The latest monthly credit aggregates from Statistics Canada (StatCan) puts the total credit liabilities of households -- including mortgage and non-mortgage loan debt -- at $2,811.4B as of November 2022. That figure is up $7.5B. or 0.3%, from one month prior.
Although mortgage debt was up 7.6% year over year, it observed a slower pace of growth for the sixth straight month, rising just 0.3% to $2,086.6B in November. This tells us that Canadians are largely steering clear of home purchases -- reflected in sales volumes, which declined 3.5% in November -- as inflation rages on and the high interest rate environment continues to escalate the cost of borrowing.
READ: Canadian Inflation Hit 40-Year High in 2022 Despite Small December Dip
Tepid home-buying demand is in spite of the long-awaited reality that prices are coming down. The average selling price declined for the eighth time in nine months in November, and according to the New Housing Price Index, which is not seasonally adjusted, new home prices were down 0.2%, marking a third straight monthly decline.
Non-mortgage debt increased 0.2% to $724.8B. The latter extends to include credit card debt with chartered banks, up 0.9% in November after rising 1.7% in October.
“The increase in November pushed credit card balances higher than their previous peak level recorded in February 2020, before the COVID-19 pandemic,” states StatCan. “Certain households may have been more reliant on credit card debt to meet short-term obligations as increasing interest rates and inflationary pressures affected households' ability to manage their debt.”
The government agency also reports that real estate secured debt, composed of both mortgage debt and home equity lines of credit, increased 0.3% to $2,257.4B in November, while home equity lines of credit alone saw a mild rise of around 0.06% to $170.8B.
“Recent increases in mortgage and non-mortgage loan balances observed through these estimates are likely to have varying impacts on households, depending on their economic and demographic characteristics,” the report goes on to say. “As indicated in the latest estimates from the Distributions of Household Economic Accounts, more economically vulnerable households had higher-than-average increases in their debt in the third quarter of 2022 relative to the same quarter a year earlier, especially the lowest 40% of wealth holders (+7.9%) and those less than 45 years old (+2.4%).”
