B.C. leading Canada in household debt growth
Last Updated: Tuesday, May 26, 2009 | 11:24 AM PT
CBC News
The study found household debt rose an estimated $300 million across Canada last year. (CBC)British Columbians are running up debt to pay for their lifestyle faster than other Canadians, according to a study released by the Certified General Accountants Association of Canada on Tuesday.
Household debt in this country grew by an estimated $300 million last year, putting the debt load faced by Canadians at a staggering $1.3 trillion, the highest household debt has ever been, according to the report issued Tuesday in Vancouver.
And B.C. is faring worse than other provinces, with 56 per cent of its residents reporting they were carrying an increasing debt load, compared with 42 per cent nationally.
Rock Lefebvre, the vice-president of research and standards for CGA-Canada, says the province's pricey real estate market is partly to blame for the high levels of debt in B.C. Nationally, mortgage debt makes up an estimated $900 million, or about two-thirds of the household debt.
But Lefebvre also blames what he calls the normalization of living on borrowed money over the past 20 years for the rising debt levels across Canada. Of the $1.3-trillion debt figure, he said, $400 million was for daily living expenses.
"There is no doubt that access to credit has been one of those very influential indicators. And the other thing that has changed a lot is people's behaviour towards debt. There has been a big change in how people view debt, and how they view money," said Lefebvre.
"What Canadians told us when we surveyed them is they are spending more on discretionary items, and that can range from plasma televisions to a coffee in their favourite coffee shop in the morning," he said.
Savings rate plunging
The report, entitled Where Has the Money Gone: The State of Canadian Household debt in a Stumbling Economy, was based on a consumer survey conducted in November 2008, which asked Canadians what changes had occurred in their household finances over the previous three years, with a focus on household debt, income, assets, wealth, spending and savings.
The report found 85 per cent of indebted Canadians have outstanding debt on a credit card, while 21 per cent of Canadians who are in debt say that they are in over their heads and can no longer manage their debt load. Despite the increased debt levels, most Canadians perceive their financial condition to be better than it is, according to the report.
As a result of the study, the CGA is calling on governments to do more to promote saving and paying down debt, saying a balance between spending and saving is a better solution to the economic downturn than consumer spending alone.
The report was based on an online survey of a controlled sample group made up of 2,014 households across Canada, and had a margin of error of 2.2 per cent, 19 times out of 20.
Corrections and Clarifications
- This story incorrectly said previously the report found 85 per cent of Canadians have outstanding debt on a credit card. The report actually found 85 per cent of indebted Canadians have outstanding debt on a credit card. May 27, 2009|10:26 a.m. PT
