Average Canadian household debt reaches $96,000

Canadians are borrowing more because since the 1970s, real wages have not kept up with the pace of inflation, pushing the country's average household debt to $96,000.

CTV News Channel: Clarence Lochhead, economist

An executive director with Vanier Institute of the Family says with household debt at such a fragile state and with too little income and too much spending, Canadains will continue to bring the debt average up.

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CTV.ca News Staff

Date: Tue. Feb. 16 2010 7:38 PM ET

The average Canadian family's household debt rose to $96,000 last year, a new study says.

Debt-to-income levels rose to 145 per cent – the highest level ever recorded in the study, which has run annually for 11 years.

The Vanier Institute of the Family study found a dramatic rise in late debt payments.

Mortgage payments that were at least 90 days late were up 50 per cent over 2008.

Additionally, there was a rise of 40 per cent in credit card payments that were three months behind.

The study said first-time mortgage buyers were taking on the most debt, unsurprisingly. However, the study says that many have taken advantage of record low interest rates and may have problems making payments if interest rates rise.

Two-thirds of Canadians 18-34 would find themselves in trouble if their paycheque was delayed by only one week, a September 2009 survey by the Canadian Payroll Association found.

However, the study also found Canadians were saving more since the recession began.

The personal savings rate rose from about 2 per cent to nearly five per cent in the last four quarters, the study reports.

"This is a huge shift in attitude and behaviour by households," the study says.

On Tuesday, Finance Minister Jim Flaherty introduced tighter mortgage regulations for Canadians, in part out of concerns about rising debt levels.

Comments are now closed for this story

None of your business
said

My debt is 3 times that.

MAL of TO
said

For David, I would estimate above 90% is mortgage or business debt [loan for home business etc.], and yes a clarification would be nice but most of the financial 'linked to' stories of 2009 and 2010 have been blatant misrepresentation so they can sell their article to online news pages. And Ted, right argument but wrong target... it isn't so much the big banks as the next level of credit card institutions [grocery stores, loan outfits, US branch office] that give out $10,000 credit cards at 30% and up to anyone and everyone, often people get 2 or 3 different ones and are in debt close to $50,000 in months. Yes, they are responsible for their debt but if I put a pack of cigarettes on the table in front of someone trying to quit, aren't I as much to blame as them. We need country wide minimum standards to qualify for credit, because even though you pay your debts you will still be stuck with the costs if I don't.

The Oracle of (905)
said

About a year ago, as the economy was faltering, the federal gov't encouraged homeowners to go out and spend money to take advantage of the new Home Renovation Tax Credit. At around the same time the B of C guaranteed that these historically low interest rates would not rise until at least mid-2010.Why should anyone be surprised that debt levels skyrocketed over the past 12 months? Does anyone else see a connection here?

Charles Regina
said

Jared could not have said it any better!!! Banks own the world. Not the banks' employee's, but the executives who you never see, nor hear of...They have a massive influence on all of us, whether we or the governement, know it or not. They are business partners with all of the biggest corporations in the world, they meet regularily, and i can tell you..."it's literally just business"...im sure we've all heard that before...They can change rates at anytime; heck some people almost exclude the possbility of them even planning a recession 40 years ago! The only thing stopping them from complete power is the middle class. Without the middle class, well, your either rich or poor. Nothing, should be taken for granted. The worst has yet to come. My advise? Find a source of income that isn't taxable, SAVE SAVE SAVE, and DONT EVER let them know you have that money available.Nobody likes it when your pets disobey, let alone mess the "order" of things.

VIP
said

Unfortunately you forgot to add the additional debt of $100,000. or thereabouts (depending on the province you live in) per household that federal and provincial governments have borrowed on your behalf without asking you.

SL
said

The 96,000 dollars debt includes: mortgage,consumer debt and "others".The Vanier institute has the full report on its web page.

karen
said

This article says that debt rose to $96K, but what was it before? Perhaps if it provided some comparison to another post-recession period, I could consider this more than fear-mongering. I realize that there are people who have planned and been financially responsible, but circumstances have caused them to fall into debt. But I can't imagine that there are so many as to make that the new national average. Who are these people and where is this information being collected?Also, who is giving these people the credit that allows them to fall that far? That is a better question. Yes, people should be responsible and not take on too large a debt, but ultimately, who thought these people would pay it back, especially if they are lending the last $1K of the $96K?I

Daryl
said

Although details about how the $96,000 figure was arrived at are vague, the article does mention the following specific, "The study said first-time mortgage buyers were taking on the most debt, unsurprisingly."This suggests that the study does include mortgage debt. Otherwise, why mention it? If this is so, then all the study shows is that housing prices are rising faster than salaries, and that young people are buying more expensive houses out of the gate, rather than buying a cheaper "starter home" in order to accumulate equity and lower their future mortgage on their target home.The reporting of this study is alarmist and misleading. But hey, everyone is talking about it. The story has been picked up by local affiliates who, obviously, have not vetted the story either.

M
said

TED.If you are carrying $30000.00 in debt on credit cards charging you 26%. You deserve what you get. Stop spending money you don't have ! Take responsibility for your life and stop trying to blame someone else. You make your own bed in this world, be prepared to lie in it.

yoyo
said

This figure is including Mortgage debt. If you go to the Vanier institute website, it shows a chart on page 12 of the actual study. That clarifies things a bit.

Vanc Guy
said

OK so lets get some better rules and limits around credit cards! My kids can get one and get screwed for life with ridiculous amounts of credit.Credit card companies have to stop changing the interest rates period! and 2 pts above prime should be more than enough.Stopping credit card debt would make a huge difference for everyone!

Island Man
said

That $96000 does not inckude the record debt Harper is running that we all own a share of. Don't forget the mess the Cons are leaving our kids after all those years with the Libs cleaning it up...pretty sad legacy for Herr Harper to leave Canadians..

Bob on vacation
said

I used to be a middle manager making a bit over $100K , as was my spouse, and was always amazed at the "stuff" I saw many of my employees buying that I figured I couldn't afford on twice their family income.....expensive leased cars, the latest 50" HD tv, electronics and furniture on the "no payments for 2 years" plans. I was boringly stashing the max into RRSP's and living with a 5 yr old car and a couple of old style tvs. When the hammer starting falling on these people they found it was difficult to eat their high end electronics, $1,000 stainless steel bar-b-ques and IPhones. It was sad to see them blaming absolutely everybody except themselves that they had built up mountains of debt without a minutes thought to their futures. For those who are quick to blame banks and credit card companies......they just facilitate the "I deserve it NOW" mentality that you see everywhere. People have to grow up and accept that they can't have homes like they see on HGTV.....

Craig Kennedy
said

From the report:The average debt per household hit $96,100 in the third quarter 2009 or $87,200 if only consumer debtand mortgage debt are included. Both are at new record highs. Total debt per household advanced 5.7%in real terms during the last year. (See appendix C.) In the latest year, consumer credit advanced by 7.5%per household while mortgage debt advanced by 6%. “Other debt” held mostly by unincorporated businesses,which are part of the household sector, actually declined. This suggests that small businesses maybe having some difficulties accessing credit.

Michael Cambridge ON
said

To Prof. Pye Chartt - For once, I agree with you and well said.

Jay, Ottawa
said

Conservative Girl said "How many people on here complaining voted Liberal? You think it's bad now - just wait until the HST comes in and you have even less money for food and the other bare necessities..." >>>> I don't think this can be politicized given the Liberal government of Ontario put it in place and the federal Conservative finance minister liked it so much he said that other provinces should consider doing the same thing. The Liberals and federal Conservatives are on the same page on this one. Either, it's off topic.

ian
said

To answer the question on many minds here is the breakdown from the report.The average debt per household hit $96,100 in the third quarter 2009 or $87,200 if only consumer debtand mortgage debt are included. Both are at new record highs. Total debt per household advanced 5.7%in real terms during the last year

Millicent Wendy
said

I totally agree with what "David in Laval" said. Although he should have also mentioned that now that communist China monopolizes everything, they've also come up with a clever scheme that when they do manufacture products they have made sure that the same "reliable" products we "used" to buy "Made in Canada" but now by "Made in China" have a short life span so the turn over rate of our buying, using and replacing those products is more frequent than it used to be..thus giving the economy of communist China another advantage buying more from them because it doesn't last like it used to when we manufactured it. Very clever! And there goes up more credit card debt. This year alone I've had to replace "3" "Made in China" electric kettles whereas the one I bought "Made in Canada" lasted me 10 years.

Vern
said

If that $96000 doesn't include mortgage, than I have some spending to do!! Just trying to do my part!

Justin Vancouver
said

Some opinionated people are quick to assume that when some people use credit cards they are spending willy-nilly on junk they don't need. Not true! In this recession some people are using it to buy groceries etc. Should they stop eating? Get real..because you pompous fools are shouting down impoverished people who have had their means and ability stolen from them thanks to Corporations sending jobs to China. You're likely the very shareholders and CEOs that like Marie Antoinette of the French Revolution carry the philosophy of "Let them eat Cake"! Careful because the recipe for the revolt you created with your globalization to benefit you and your ilk , might just soon be fed back to you and you'll be the ones eating some pretty sour cake when the masses get done with you. Control only goes so far before people wake up and turn on you in droves.

LB
said

If that doesn't include a mortgage, that's a sad statement on society.That was the purchase price of my house just 8 years ago!I guess that's what happens in a "ME" society. You're still going to survive if you don't have the best of everything! Think Sacrifice.

Conservative Girl
said

How many people on here complaining voted Liberal? You think it's bad now - just wait until the HST comes in and you have even less money for food and the other bare necessities of life, forget anything extra. Middle class - what's that! Pat yourselves on the back for a job well done. Allowing a "cash grab" by the McGuinty government at the working man's expense. No wonder people are in debt and it's only going to get worse!

Kim Financial Consultant for the past 30 years
said

To Larry, I wouldn't trust my school board to teach money management.....are you aware of how many teachers out there have not provided for their own retirement? Wasn't it Alberta taxpayers who just within the past few years had to cough up to cover losses in the teachers pension plan. Stay away from my child please!

Millicent Wendy
said

Joe
said

The means have to learn to live within the people, the banks want us to be slaves and they are doing all they can to make this happen. Banks make money in a recession, or they would not allow them.

Kim in Calgary
said

How should this be a surprise...we now live in a society where it is expected that your parents pay your university education, then you marry, buy a big two story 1800 square foot home and new vehicles......all financed to the hilt....let's even back up to the younger crowd...they do not need every single gadget and a vehicle to go to their part time jobs...take a bus, limit the cell phone usage and learn to save the top 20% of your paycheques so that you will have something to contribute to your own education, housing etc...

David Laval
said

Problem is there's too much cheap "Made in China" luring people to use credit cards because stores discount everything thanks to cheap made in China exports which gives consumers a belief that they're getting a deal and buy "now". It adds insult to injury when communist China is rewarded with our jobs shipped overseas to boost their economy, plus they finance all the debt..so essentially when you buy their products on credit you also are paying them a percentage on using the credit card to buy "Made in China". And someone in mainland China will soon have your job on top of it. Isn't it brilliant how they've got it all figured out and handcuffed you into the entire scheme? Mess is right! It's high time we woke up to what's really going on and how communist China doesn't play fair in the global game by manipulating its yuan currency to low levels to steal business from the rest of the world and have nil labor and environmental regulations that corporations detest in the western nations.Corporations, the communist Chinese government (export monopoly, monetary policy) and lending institutions/banks (financed by China) are driving us all to bankruptcy.Corporations and the Chinese government work together as equal partners to drive the world with their rules. Communist China should be using their own domestic market to fuel their growth and stop leeching from our economy. They want only to be an export nation without reciprocating and being an import nation with an even trade balance. Globalization cannot succeed with that mindset.It is so lop-sided that our economies tank as theirs grows as they refuse to allow their citizens to grow into consumers buying our products or if they can they slap on huge tariffs so they are unaffordable.

L
said

To those blaming credit card interest rates, if you can't afford it, don't buy it. I buy a lot on my credit card but pay it off every month, I buy a lot on it to get airmiles, but never buy what I can't pay off. You don't pay the interest rates if you pay it off. Its simple. Want and need are different things, you don't need a fancy car, name brand clothes, a new big screen TV etc etc. I do agree though with those saying the prices of things are out of wack compared to salaries, one big example is housing, even condos are out of reach for most people, buying a house as a single person is almost impossible in the major cities in Canada. But I do agree with shortening terms of mortgages and requiring downpayments in spite of that, we don't want to end up with a housing and mortgage crisis, look what that did to the US.

Prof. Pye Chartt
said

Unlike Americans, generally speaking, whining Canadians still fail to make the connection between taxes and how much money you have to live on. We're more likely to rag on credit card companies who facilitate our stupidity than pressure politicians to maintain (or lower!) our current tax burden across all three levels of government. Pretty funny.

Bob
said

Good luck Leslie. A few extra things you could do to help and make sure you can afford to eat more that once a day would be to lose the cats & dogs - the lack of vet bills and feeding cost would be a huge savings. Also $200/month insurance for a 14 year old car, if you shop around and drop some coverage etc you could put that around $50/month since you're not commuting with it. The $130/month phone can be cut down to $25/month through bell with no caller ID or add-on plans. The $300 in hydro is a bit big, turning down the thermostat, using CFL bulbs would likely help drop that down. Just those small changes would help. Good luck.

Cathy Ottawa
said

David the $96,000 debt would be everything but mortgage debt: credit cards, loans such as car or unsecured select lines. etc.

David from Laval
said

Jen
said

You know, I just don't understand why everyone is so anti credit card! I use mine for everything, but pay it off every month. Twice in the last year I got screwed by "stable" companys that didn't provide services. Had I not used my visa for my purchases I'd be out over $6000.As far as I'm concerned, using a credit card should be approached as alchol - please use responsibly!

Calvin Alberta
said

Totally agree with Anne. Based on many studies, because a large number of Canadians with a decent paycheque are working for nearly half a year each year for the taxman (it is even more for many people), it is completely understandable Canadians have accumulated so much debt. If people in Ottawa are really serious about the debt, they should cut the government waste in the upcoming buget, return some money to people's pockects, give us a break! It is a real concern that even with so many taxes the governments could not stand economic downturn, easily slide huge deficits, and will have to use people's money one way or another to climb out the hole.

Doug # BC
said

Some good points have been made.THa's a refreshing change. Peoples financial situations are quite a private matter,so it is difficult to generalize.But to David in Mississauga,I could not agree more.More often than not,a home is an "investment",so it needs to be treated differently.They could have calculated the debt part by subtracting the amount still owed,from the real value of the home.I too,would like more details on how that was done.If the home is worth $300,000,but the amount owed is $100,00,you could argue that the homeowner is $100,000 in debt,or that he/she has $200,000 in equity,which would be savings. Other credit,for things like cars,TV sets,food, and almost all other consumer items, are NOT investments.They are expenditures, pure and simple.This is the credit that should concern most of us.People really need to learn how to differentiate between the things they NEED,and the things they WANT.They also need to learn how to look forward,and understand how their position will change if interest rates rise,if they lose their jobs,if they face an emergency which costs big money. I agree with the half of "Jared's" post that says cheap money can lead to reckless spending.But trying to put the blame on someone else,for your personal debt,though it may sadly be the Canadian way,is simply a refusal to accept any level of personal responsibility.That does not bode well for those who seek a "free and just society".To have that,you must have citizens that know what that means,and are willing to do their part to sustain it. Not people who think that is somone else's job.

ShaunG
said

Wow, I'm honestly not surprised. We live in a "NOW" generation where people cannot save and need to have something they cannot afford NOW. Who cares if this number is mortgage, consumer, student loans, etc... the fact of the matter is people are in WAY over their heads and nobody is being serious about debt. The fact that people cannot put their pay cheque in their sock drawer for one week is astounding. What kind of life are you living? Like I said we all need to get REAL about debt and stop living beyond our means!

Rata
said

The credit card market seems to be unregulated and they are probably gobbling up most of the disposable income through their high interest rate charges.

scrooge
said

If this figure includes mortgages then it's a positive headline. It would mean more Canadians are able to own a home/appartment. You'd think it wouldn't have been so hard to clarify that headline, but at least it's eye catching eh?

scrooge
said

Graeme
said

That actually seems incredibly low on the surface considering it includes mortgage debt. Considering the cost of housing, I'm sure many financially responsible people have a mortgage alone worth much more than this (but I guess this is offset by people who rent or older people who have paid off their mortgage). So I have no idea what to make of this article since it gives no context if this number is reasonable or not (it doesn't seem horrible on the surface). I would have liked to have seen a breakdown of the debt (how much is credit card, etc.)

Anne
said

I'd be so much better off if I could have more of the money that I earn stay in my pocket, rather than pay so much in taxes. It's disheartening. So often we hear 'you must have 3 months of expenses saved up for emergency'. Right. I have barely enough to get through the end of the month and I earn a decent enough wage. You try to cut here and there, and then something goes wrong with your car, or your furnace...and there you are. I swear my car can sense if I have a little bit saved up, everytime there's a little pot, something goes on the car, and it is never a $25 fix.

RVH
said

People are for most responsible for what they spend. Banks and credit cards and charge what they want and if people are stupid enough to purchase a new $2500 that they can't afford on cc they can't afford and pay 17%-28.5% then that is their problem. If you can't afford it then don't buy it. Take a year to safe up. I would not consider for a second to purchase anything from home depot futuer shop on their cards and many people do. its sad to see so many people not making min payments and sink deeper and deeper into dept.

Mira
said

That's funny the same man that is acting out of "concern" is one of the reasons why Canadians are in so much debt, he should really look at the tax burden Canadians are faced with. It would be interesting to find out what kind of debt the $96,000 is taking into consideration. If it doesn't take into consideration mortgage, that is alarming, if it does, well all you would have to do is just look at the price of houses these days. Even townhouses are not as affordable as one might think they are.

J.F.
said

If my pay cheque was delayed one day, I'm totally boned...

Roy Robb
said

Agree with David..there is secured debt and unsecured debt...I worry less about my mortgage than credit cards as I have an asset to back it up. As long as the housing market doesn't crash, I'm ok. Credit cards, personal loans (even car loans) are the ones people get burnt on.

Solid in St. Catharines
said

David in Mississauga - I agree - I am 35 years old with an 85K mortgage. I believe that I am sound financially and yet this figure makes me feel like I am treading water. I have assets and equity. More clarifcation would have helped.

Prof. Pye Chartt
said

We're a society based upon mindless consumerism (driven by the "green monster" and trying to keep up with Tim and Suzy Jones), and banks are the corner drug dealers, handing out as much loaned cash-"crack" as we can financially ingest. Many addicts succumb to the drug, believing it will make them happier or facilitate the life they think they "deserve." With all narcotic abusers, often the end-result isn't pretty. The true enemy is our broad culture of greed and desire, and the inability to live simply and appreciate the things of real weight and importance (family, friends, nature). Plenty of "lost" sheep...getting slaughtered.

Jared
said

Cheap money leads to irresponsible lending practices and overleveraging. We need to start realizing it's not the bankers, speculators or mortgage companies who caused the economic problems we face...it's the Bank of Canada who artificially sets low interest rates and causes malinvestment.

Larry
said

Several years ago I wrote our local School Board asking our Schools to have money management classes. They responded with a condescending pat on the head, now look at the financial trouble people have today regarding money management.....they don't have a clue!Larry......Vancouver

Happily Married
said

As a, debt and mortgage free, married father of two grown children's who has just turned 50, here is my advice to young couples. First, in life, there will be things you want and things you need. Most of them are things you want. Now, it's fine to indulge the odd want. Take your family on a nice trip or buy that special coffee or new outfit now and again. However, you should never borrow money for something you want. Always pay cash. A vacation is actually more fun if you and your spouse have agreed to sacrifice and save up for it. Trust me, it will mean more and be more significant for both of you.Second, of all your investment opportunities, debt tends to be the best one. Investing in debt increases your net worth and pays you an after tax return of whatever your debt interest rate is. People who are debt free are more happy and secure in life. It takes a lot of pressure of your relationship and your family. Others may seem to be doing "better" but you will soon learn that it is all flash and no cash.

Leslie
said

At first glance on my say those people buy too much stuff, as if a love of shoes is the problem.At one time maybe that could be a valid answer.I do not believe anymore. I do not have any credit cards, I have worked 30 years, the bank and I own my home. I have managed with one income most of my adult life. Not now, 1000.00 mortagage, 300.00 hydro, 130.00 phone, 200.00 two insurance payments. That does not include maintaining a 14 year old car or gas, or food and medicine ( 65.00) My take home 3000.00 a month.No savings to speak of. I do not own a boat, cottage, second car, big screen tv, cell phone, But if I have to take a cat or dog to the vet, or call an electrician, or plumber I am in BIG trouble.It is not unusual for me over this past 2 years to only have one meal a day. A course I took last year I thought would be ok to pay for and an unexpected 500.00 dollar vet bill and I am in trouble, and cannot get out of it.I fell in October, broke a vertebrae in my back, now after 30 years I have just ran out of sick time, and have no paycheque. In limbo between sick UI benefits and Sun Life disability waiting period of 6 weeks. Looks like I am going to be rather hungry for the next few months, and the hydro phone and mortgage people will be unhappy with me. Wake up people that make the rules, most of us out here in the real world have pretty much the same story.Wish me luck Leslie

Ted
said

Do you think 26% interest levels for Visa or Mastercard has anything to do with the debt load. At that rate if you have a card debt of 30,000.00 and you can only make minimum payment it would take 41 years to pay off the card, My advice, pay cash or don't get it...Banks are raping us and Canada is smiling all the way to their pockets..

Portes
said

People have got to learn to live within their means. Cut up all those credit cards and throw them in the garbage, you don't need them. If you don't have them then you can't spend what you don't have.

Matt in NS
said

I wonder about these numbers. I used to be a loans officer and sure I saw my fair share of people who were way in over their heads, but at the same time I saw lots of people who were in a great financial position. If that's a true average there must be a ton of people that are super far and gone to offset all of those who have it together!

Jay, Ottawa
said

I don't want to sound all doom and gloom but if debt continues to rise and that many people are at risk of bankruptcy after the coming moderate interest rate hikes, this recession may be nothing compared to the one coming in the near future. I also worry that the offset in savings would only serve as a temporary buffer against that debt load. To get debt under control we need people to stop spending on consumer items and focus on only necessities and debt. That however will do nothing to fuel jobs. What a mess.

ClaimBankruptcy
said

The Vanier Institute sees the writing on the wall and I agree 100%. If the economy can't be sustained with everyone borrowing at insane rates what will happen when people stop spending? I say a collapse like you can't imagine.

David, Mississauga
said

It would be useful to know how much of that 96,000 is personal debt, i.e. credit cards, and how much is mortgage debt. One sentence in the story would have clarified this.

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