3 Signs Canadians Are Managing Their Debt

February 24, 2012

Canadian household debt is a hot topic again for both the government and the media. Recently, there’s been a flurry of negative press regarding Canadian household debt.  And rightfully so. But in the face of all this negative press, positive signs are starting to shine through indicating that Canadians are starting to hold back the reins and are learning to live within their means . I’ve compiled 3 signs showing that Canadians are managing their debt much more responsibly than the media is currently reporting. So let’s have it for some positive news!
3 Signs Canadians are managing their debt
1) Credit Has Grown By Less Than 1 per cent in 2011 – The latest report of non-mortgage debt trends in Canada by TransUnion credit shows that credit grew by just under 1% in 2011. This is the lowest annual rate since TransUnion began tracking debt in 2004. Check out the TransUnion press release here.
2) 84% of mortgage-holders can handle an increase of $200 a month – In a study performed by CAAMP in fall of 2011, 84% of mortgage holders claimed that they could withstand a monthly mortgage payment increase of at least $200.
3) 10% of mortgage-holders withdrew equity from their mortgage in the past 12 months. This is down sharply from 18% measured in the previous 3 years. This decrease could signal a shift in consumer behaviour away from the mentality of using homes as ATMs. Looks like we’re headed towards financial responsibility. Check out CAAMP’s fall 2011 consumer and industry survey for more details here
It’s great to see that Canadians are getting the message regarding the dangers of incurring debt. At the same time, I’m always approached by borrowers who need to refinance their mortgage and consolidate debt. Despite borrowers best intentions to stay out of consumer debt, they can very quickly find themselves living outside of their means and under tremendous pressure to keep up with their debt payments.
Things Happen. At Least You Can Consolidate Your Debt
Although you shouldn’t rely on your home’s equity as an ATM machine, mortgage refinancing is a useful tool for burdened borrowers to provide payment relief on high interest credit cards and loans. However, borrowing from Peter to pay Paul isn’t a solution. I’m not saying: “go out and spend like a rock star, you can then borrow the equity from your home!”. That’s just not cool and I’m not for it. But, things happen, so debt consolidation through mortgage refinancing is an option. A more comprehensive look at your situation is required to effectively move a away from consumer debt and live within your means.
If you’re in a situation were you’d like to consider debt consolidation, reach out to me. I love answering questions. At the very least, I’d be happy to share with you our new online debt management tool that we’re offering free access to. This is a fantastic tool that let’s you manage your debt. Until next time.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.