Canadians' Insatiable Debt Appetite Up 6% In Q4; Debt-To-Disposable Income Ratio Now 167.25%

In Q4 of 2016 Canadian consumer debt rose 6% to $1.72T and the debt-to-disposable income ratio reached 167.25% (compared to 166.75% in Q3). The latest data means households owed more than $1.67 for every dollar of disposable income in the quarter.

Noah Zivitz, Managing Editor, BNN

Canadians' insatiable appetite is back on full display according to an Equifax report released Wednesday. 

• Total consumer debt rose 6% to $1.718 trillion in Q4 of 2016.
• Debt levels rose at the fastest pace in the country's housing hotbed.
  • Torontonians, on average, had $20,857 of debt (excluding mortgages) in the quarter, marking a 4.7% year-over-year rise.
  • Debt levels in Vancouver rose 4.6% on average to $24,487. 
• Equifax also noted "renewed appetite" for debt in Western Canada, with average levels rising
  • in Alberta (+1.5%) and
  • Saskatchewan (+2.6%) from the prior year.

"We used to say we don't need to worry about consumer debt in Canada because the Bank of Canada is going to be on hold for a very long time and interest rates aren't going to rise," said Frances Donald, senior economist at Manulife Asset Management, in an interview with BNN, "but what we're seeing in the current environment is that we're actually importing higher interest rates from the United States so now we're sort of separating from the idea that we need the Bank of Canada to go to necessarily see some pain here."

“The mortgage regulations introduced in Oct. 2016 are likely to keep debt growth in check and buffer the economy from a potential hard-landing in the Greater Toronto Area housing market,” wrote TD Economist Diana Petramala in a report to clients. “However, the risk is that continued low interest rates, and soaring prices lead first-time homebuyers to take on too much debt while existing homeowners increasingly draw on the equity that is rapidly accumulating in their homes." Also read this article on TalkMarkets: Fitch Warns Canada’s Housing Markets Are 'Unsustainable'

Provincial Debt (Q4 2016, excluding mortgages): 

Ontario, $21,948 
Quebec, $18,618 
Nova Scotia, $22,353 
New Brunswick, $22,924 
PEI, $22,184 
Newfoundland,  $23,523
Eastern Region, $22,780 
Alberta, $27,989
Manitoba, $18,421 
Saskatchewan, $24,566 
British Columbia, $23,448 
Western Region,  $24,675
Canada, $22,113

Source: Equifax