Canadians Deeper in DebtBy Andrew Rickard | August 12 2014 02:17PM
According to a report released by BMO Capital Markets (BMO), Canadians have taken on more debt over the last year.
BMO published its annual Debt Report on August 5, and it shows that average household debt in Canada has increased by 6% over the last year, up to $76,140 from $72,045 in 2013. While Ontario has the lowest level of indebtedness at $67,507 per household, the average amount in Alberta is nearly twice that amount, with an average of $124,838 per household.
The booming economy in Alberta, particularly in Calgary, has resulted in disproportionately high levels of debt compared to other regions of the country. "Part of the reason household debt in Alberta is so much higher than in other provinces may be due to rapidly rising house prices, which have caused home buyers to take on larger mortgages," notes Sal Guatieri, senior economist at BMO Capital Markets.
The report also broke down the various kinds of debt held by Canadians. The number of households paying off student loans has remained steady at about 15% but the number of Canadians who have mortgages has increased by 13% year-over-year, with 43% of households now reporting this kind of debt. "The rising share of households with a mortgage is partly driven by the active participation of first-time buyers, mainly young Canadians," explains Mr. Guatieri.