credit and debt
BETTING ON THE HOUSE As household savings increased into the middle of 2020, new household debt slowed. This bodes well for the recovery.
Households acquire debt in a few different forms: throughmortgages, non-mortgage loans (including student and auto loans), and consumer credit (think credit cards and lines of credit). Overall, Canadian households saw their debt acquisition levels remain somewhat muted in Q2 2020, at $12.1 billion—a level similar to that of Q1’s $10.4 billion but down 59% from the previous three-quarter average of $29.5 billion. Interestingly, the composition of new debt acquisition shifted in Q2, with the $26.8
billion in newmortgage debt up 82% fromQ1 andmirroring increased home sales activity across the country. Meanwhile, consumer credit declined by its largest amount in history (by $14.5 billion in Q2; down 152%) and non-mortgage loans fell by $179million (down 113%). With savings up and debt accumulation stabilizing, Canadian households appear to be prudently planning for their collective financial near-term futures.
CANADIAN HOUSEHOLDS CLEAN UP THEIR BALANCE SHEETS
TOTAL FOR HOUSEHOLDS
MORTGAGES
CONSUMER CREDIT
NON MORTGAGE LOAN
$13,093
$909
$20,359
$34,361
2019 Q2
$8,504
$728
$22,392
$31,624
2019 Q3
$4,176
$556
$17,379
$22,111
2019 Q4
-$5,736
$1,430
$14,711
$10,405
2020 Q1
-$14,482
-$179
$26,771
$12,110
2020 Q2
-$8,746
-$1,609
$12,060
$17,050
Q1-Q2 2020 CHANGE
152%
-113%
82%
16%
-$27,575
-$1,088
$6,412
-$22,251
Q2 2019-Q2 2020 CHANGE
-211%
-120%
31%
-65%
SOURCE: FINANCIAL FLOW ACCOUNTS, STATISTICS CANADA DATA: NEW MONTHLY HOUSEHOLD DEBT MILLIONS
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