It isn’t just students and middle-aged households that are facing tremendous debt levels. A new report from Equifax Canada released Monday shows that total consumer debt rose 6.1 percent, or $77 billion, in the second quarter of the year. In addition, consumer debt rose by 6.5 percent for those 65 years of age and older.
The substantial increase among seniors’ debt was the largest year-over-year of all age demographics. Despite national savings rates receiving a boost in the Great White North, it has been concluded that it will take a long period of time for Canadians, especially for the elderly, to pay off their debt.
Seniors are at the highest risk because they have diminished incomes, have to live on a fixed-income and might be accumulating debt in order to look after their own adult children or even their own parents.
“The traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65,” said Henrietta Ross, chief executive officer of the Canadian Association of Credit Counselling Services, in the report. “With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford. They also may be accumulating debt in an effort to help their own grown children or their own parents who are struggling financially.”
Furthermore, the report also found that delinquency rates are stabilizing. In the second quarter compared to last year, the 90-day delinquency rate for mortgages fell by 19.2 percent – the city of Toronto maintains the highest delinquency rate in the country.
Although the federal government has been insisting that Canadians begin to lower their debt levels, the policies instituted by the Bank of Canada have contributed to rising household debt levels. Due to record-low interest rates of the past few years, many consumers have decided to sacrifice the future for the now.
This means that when interest rates inevitability climb then they will be in serious danger and risk facing substantial monthly debt payments or perhaps even bankruptcy.