It’s been no secret that Canadians are in trouble when it comes to their overall debt load, and our debt-to-income ratio is still hovering above the 160 per cent mark. That’s why when it was revealed last week by Equifax Canada that our debt load has increased once again, it was big news. And the fact that seniors are the category to be piling it on the fastest is even more worrisome.
The report from Equifax showed that our total consumer debt in Canada has risen by nearly $77 billion during the second quarter of this year, a 6.1 per cent increase from the same time period last year. Those over the age of 65 took on even more debt than that though, with an increase of 6.5 per cent, the biggest jump for any age group.
“The traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65,” says Henrietta Ross, chief executive officer of the Canadian Association of Credit Counselling Services.
“With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford. They also may be accumulating debt in an effort to help their own grown children or their own parents who are struggling financially.”
Helping to inflate that overall debt increase of 6.1 per cent were largely car loans, which rose by 8.6 per cent; and mortgages, which rose by 7.4 per cent.
“The increased demand for credit outside of mortgages is positive for the economy in the short-term, but could limit the ability of over-extended consumers to react to any financial bumps in the road in the future,” says Cristian deRitis, senior director of consumer credit economics at Moody’s Analytics.
The question when it comes to that senior age group is, is it really such a big deal? While an increase in debt load is never totally positive, this is only one side of the data, and there doesn’t seem to be any information indicating that seniors cannot handle that debt load they’re taking on. Tomorrow we’ll look at those delinquencies, and see if this is really a major problem, or just another shock-value headline.
