Business·AMANDA LANG

Canadians are paying down debt? Not any more, CIBC report says

Amanda Lang and CIBC economist Benjamin Tal discuss the bank's new report that suggests Canadians are starting to take on more debt after years of belt tightening.

Trend since 2009 has been for Canadians to reduce their debt loads but that's changing

Pay down debt? Not anymore

8 years ago
Duration 7:32
Amanda Lang and CIBC economist Benjamin Tal discuss the bank's latest report that Canadians are taking on more debt

Tonight's first order of business, some unwelcome news about our spendthrift ways. After a few of years of improvement, Canadians are taking on more debt. Credit cards, car loans, lines of credit, some of which are easier to carry at low rates (though consumer credit rates remain tortuously high) but all of which could bite us when — not if — rates rise.

We may be feeling a little wealthier, and we are paying down more of the principal on our mortgages, but it's hard to see this news as anything but bad.

— Amanda Lang


Canadians are ignoring those persistent warnings from the federal government, and running themselves into the red. That's according to a new report out from CIBC World Markets.

Canadians have steadily reduced their debt loads since 2009 but that's no longer the case. In the third quarter of this year, household debt jumped four per cent from last year. More troubling is how much consumer debt we're taking on. That refers to outstanding payments on credit cards or lines of credit. It's growing at the fastest pace in nearly two years.

Part of the reason: banks are doling out more cards and increasing maximum limits. Auto loans, too, are way up, by eight per cent from 2013. There is some encouraging news to balance out those strains to some degree. According to the report, "the debt-to-income ratio has stabilized" and "net worth position is at a record high." Which tells us Canadians are digging a deeper hole, because it's getting easier to climb out of it.

Amanda Lang discussed the issue with CIBC's deputy chief economist Benjamin Tal on Wednesday's episode of The Exchange.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversation  Create account

Already have an account?

now