Canadians are carrying a super-sized debt monkey on their backs.
Driving the news: Canada’s consumer debt levels reached another record high last quarter, hitting ~$2.5 trillion, per new Equifax and TransUnion reports. The rise was driven by a jump in auto loans as well as more Gen Zers and newcomers to Canada entering the credit market.
- Consumer debt is money owed to a lender or creditor on loans used for personal purchases like credit card debt, home equity lines of credit, and student loans.
- It’s different from household debt, which is consumer debt plus mortgage debt. Per Statistics Canada, household debt hit a new high in September, topping $3 trillion.
Big picture: Canadian debt loads have grown exponentially since the 1990s, largely due to a surge in credit cards and homebuyers relying on heftier and heftier mortgages. Last year, Canada became the G7 nation with the most household debt, with such debt exceeding the GDP.
Why it matters: In its annual report on the nation’s financial stability, the Bank of Canada found Canada’s system remains resilient but flagged debt serviceability as a main risk.
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