Why Canadians are carrying 22% more debt in 2015

We’re deeper in debt this year compared to last, here’s why



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The overwhelming majority of Canadians (80%) may be in debt but at least it’s mostly good debt, according to a new BMO report.

Earlier this summer Pollara sampled 1,001 Canadians from an online poll for BMO and found the average Canadian’s debt load is up from $76,140 per person last year to $93,000. Today, the bank revealed what’s keeping Canadians in debt. Nearly half of respondents cited buying real estate a main contributor to their debt load, with 34% listing it as the main factor.

One-in-10 said home renovations were among their top reasons for going into the red. And about the same number hold student debt, the survey found.

“Given the angst about high debt burdens, it’s somewhat comforting to know that Canadians are generally accumulating good debt to finance investments in their homes and educations, as opposed to bad debt such as discretionary spending on vacations and entertainment,” said Sal Guatieri, senior economist, BMO Capital Markets.

But before you go patting your neighbour on the back for their responsible use of debt, take a look at how many Canadians are going into debt for things like cars, vacations and entertainment. Almost as many Canadians listed an auto loan among their top sources of debt as did a mortgage. In fact, 18% of Canadians cite a car loan as their biggest source of debt and that number could very well rise as automobile sales continue soar past record levels thanks in large part inexpensive credit and extended loan terms.

“While rates are at all-time lows, it’s important that Canadians are aware of the risk associated with taking on additional debt, regardless of its purpose. Having a financial plan which includes careful budgeting and asset allocation can help avoid any risk and uncertainties,” said Sameh Elrefaei, head of personal lending, BMO Bank of Montreal.
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3 comments on “Why Canadians are carrying 22% more debt in 2015

  1. Definition of insanity? Counting on real estate to fund your retirement. It is incredible the amount of people out there who really believe this. Scary to say the least.


  2. We carry debt because the interest should be reasonable like 5% above prime. Mortgages amortized so that you pay minimum principal, maximum interest. I had changed the amortization on my mortgage in the 80’s and locked in for 3 yrs but when that was up, interest went from 9% to 18%, my brother’s tripled 8% to 24%. Then you hit mortgage brokers and fees and banks encourage 25 to 30 years and it never recovers when you get hit so hard. I did a 3 lot subdivision and my costs and the damage Surrey did to my personal lot and home meant that I sold 2 lots and made nothing extra to pay off 1 cent on my existing mortgage. Hopefully selling my home now will provide for my retirement. Who gets hit the hardest? The fast fading middle class! AND never do a Reverse Mortgage as Mom had a 75,000 mortgage in ’97 that became $340,000 when sold in 2010. She was 1 of the lucky ones that had enough equity that she had money to live on until she died in 2015. Subdivision damage… Removing huge exposed aggregate driveways, rendering my garage useless, destroying my landscaping and irrigation and in doing so caused the loss of renting out part of my house. Blatant favouritism is shown to the Repeat large Developers.


  3. Forum Research. In a random sampling of 1,251 Canadian adults Sunday and Monday, 42 per cent carry personal debt that doesn t include a mortgage.


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