For months we’ve been hearing about how Canadians need to start taking their debt seriously. The federal government started that ball rolling early in the year, putting tighter restrictions on secured line of credit borrowing. Canadians in turn, started to take their own debt seriously. Maybe because of the economic uncertainty around the world, or maybe just to keep our economy’s head above water – something we managed to do even during the recession. But among all the talk, there was always one exception – mortgages. Our average consumer debt levels and other economic data always excluded mortgage debt. Now though, according to the CMHC, we’re bringing that debt down too!
It was on Tuesday that CMHC said that while consumer debt levels remain high (150% of total income,) Canadians are starting to borrow less, which is a good indication that we’re focusing more on paying off what we already owe, rather than take on more. According to the CMHC, the amount of mortgages in Canada has gone down, as well as the amount of secured lines of credit, personal loans, and credit card loans. It’s not only a sign that Canadians are starting to pay down their debt, it’s also a sign that Canadians still don’t feel great about borrowing, and are worried about where both real estate markets, and interest rates, are headed.
According to Jim Flaherty, who spoke out just days before CMHC’s statements, Canadians are not only borrowing less, they’re also starting to pay off their mortgages faster. That seems to be a good indication that we’re more worried about our own personal debt levels than we are worried about our economy tanking, something it’s not likely to do. Jim Murphy, chief executive officer of the Canadian Association of Acredited Mortgage Professionals, agrees with the Finance Minister in regards to the state of Canada’s economy. Jim Murphy has stated recently that while there was concern for awhile that Canada’s real estate market was headed for a bubble, that’s not going to happen; and that consumer caution about spending is a big reason for that.
Glen Hodgson, chief economist at the Conference Board of Canada, chimed in on the conversation, saying that even though Canadians are starting to borrow less, take out fewer mortgages, and start paying down their debt rather than taking on more, it’s not a bad indication for the housing market and that “the market is pretty much in balance if you go city by city.”
