The Bankwatch

Tracking the consumer evolution of financial services

Canadian households are borrowing but many are saving too

After posting about the US borrowing landscape, I thought I would look at Canada.  I was looking at the latest Bank of Canada statistics for Canadian chartered banks as a reference point.  I compared the end of 2006, right before the banking crisis began to now.  These numbers are interesting and display behavioural change amongst consumers and amongst bank marketing. 

Millions Nov 2006 Oct 2010 % increase
Personal Loans $   40,936 $   53,400 30%
Credit Cards $  38, 627 $   57,276 48%
Lines of credit $ 123,310 $ 218,937 78%
Mortgages $ 421,138 $ 500,217 19%
Total $  624,011 $ 829,830 33%


The shift towards non-amortised debt is $114 Bn during this period.  The increase in mortgage debt is nominal in comparison.

Next I looked at savings behaviour during the same period and interestingly the numbers are surprisingly healthy although there is a clear shift towards shorter term, non fixed rate deposits.

Millions Nov 2006 Oct 2010 % increase
Chequable $   82,486 $ 201,887 145%
Non Chequeable $   85,514 $ 154,271 80%
Term deposits $ 277,725 $ 310,596 12%
  $ 445,725 $ 666,754 50%


Relevance to Bankwatch:

The numbers seem to reflect a positive position for Canadians in that there is enough cash in the aggregate.  But we we do know that approximately 45% of Canadians keep balances on their credit cards permanently so it bears asking how much of the disposable cash is also owned by credit card holders and or the lines of credit holders.  Those are the ones that reflect higher risk and rate adjustments if and when we enter a period of higher interest rates.

Written by Colin Henderson

December 3, 2010 at 14:19

Posted in Uncategorized

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