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Canadians spending more on debt payments

Canadians spending more on debt payments

Date Posted: June 14, 2019

Canadian households are spending record amounts of their disposable income to service their debt payments according to a new report released by Statistics Canada.

Canadians spent $202-billion on debt payments in the first quarter of 2019 with $91-billion of that spent on mortgage debt. Households spent more on interest than principal for the first time since 2013.

According to National Bank senior economist Krishen Rangasamy, “Of course, this is not good news for consumption growth because there’s now a reduced share of disposable income left for spending on things other than debt servicing. On a positive note, however, [principal] repayments as a percentage of disposable income remain near all-time highs for both non-mortgage and mortgage debt. The latter is particularly encouraging with regards to stability of the housing market and hence financial system as a whole.”

The Bank of Canada began to increase interest rates in 2017, however, they have since remained stagnant for the last few announcements. Given the current global economic climate, markets are expecting the Central Bank to start decreasing again, potentially in 2019.

More from the Financial Post article here.

Concerned about your debt payments? Talk to your Mortgage Broker today for possible solutions.