Canadians have paid off a record amount of non-mortgage debt in 2020, which is excellent news, as the latest annual decline in this category of debt dates back almost thirty years, according to Statistics Canada.
Total debt, unsecured by mortgages, of Canadian households has decreased by $ 20.6 billion since the start of the pandemic through January 1, 2021. From this decrease, we observe a decrease of $ 16.6 billion, card debt of credit. Mortgage debt, however, increased to $ 99.6 billion during the same period.
The decline in credit card debt marked a sea change for a category that has seen average annual growth of 20.7% over the past two decades, from $ 13.2 billion in 2000 to $ 90.6 billion. . One billion dollars in February 2020.
While the declines are widespread, it was borrowers with the lowest credit scores who experienced the largest declines. The same is true of the debt ratio. This suggests that the most vulnerable debtors have managed their savings wisely. This situation is also not unrelated to the fact that consumer spending by individuals has dropped considerably, due to various closures in the goods and services sector. There was a decrease of 14.7% in the second quarter of 2020, compared to the previous year, representing the largest annual decrease since 1961, the year Statistics Canada began recording them.
Families had few opportunities to spend and many saw this period as an opportunity to save money and pay off debt.
However, while spending started to increase as restrictions were lifted, as the labor market recovered, net spending remained lower than the previous year. However, the mortgage easing announced at the beginning of the year led households to borrow to buy a house. Mortgages in March and April showed exceptionally strong growth over the previous year, as credit card balances remained below their pre-pandemic levels.
Savings and deposit levels remain high, indicating that many households may have fewer resources to use credit and that this trend may continue for some time.
Note that of a total of approximately $ 2.5 trillion in unpaid debt, one year after the start of 2020, two-thirds was attributable to mortgage debt.
Martine Dallaire, BAA
https://linitiative.ca/depenses-la-situation-des-debiteurs-sest-amelioree-au-pays/https://linitiative.ca/wp-content/uploads/2021/10/finances-calcul.jpghttps://linitiative.ca/wp-content/uploads/2021/10/finances-calcul-150×150.jpg2021-10-03T21: 17: 24-04: 00FinanceCanadians have paid off a record amount of non-mortgage debt in 2020, which is excellent news, as the latest annual decline in this category of debt dates back almost thirty years, according to Statistics Canada. Total unsecured debt of Canadian households has …Martine DallaireMartine