Are Canada’s top money managers more frightened about the growing household debt across Canada or the Great White North’s growing housing bubble? Despite both being related to one another, debt is the winner.
According to an informal Business News Network (BNN) survey, most money managers are terrified of the mounting debt than the housing bubble. The study found that close to two-thirds (63 percent) of the respondents were concerned about rising household debt. Meanwhile, more than one-third (35 percent) were more concerned with the ballooning housing bubble.
This is interesting due to the fact that both aspects are directly related to one another. Here is what BNN writes:
“Household debt across Canada reached several record highs in 2015, with the latest height announced in mid-December when Statistics Canada released its data for the third quarter. At the time, StatsCan reported the ratio of household credit-market debt to disposable income rose to 163.7 per cent in the three months ended Sept 30. Total credit-market debt also hit a new record of $1.89-trillion during the same period, with mortgage debt accounting for the lion’s share at $1.23-trillion.
“That is the connection to so-called housing bubble risk. The more debt households take on relative to their income, the more difficult it will be to pay off. When households fall on hard times – through job loss, illness or other unexpected changes to income levels – repayment becomes even more of a challenge.”
It was reported earlier this month that the average household spends $1.64 for every dollar in disposable income. In fact, the average Canadian consumer maintains more than $27,000 in consumer debt. This is a case of being house rich but cash poor.
With climbing price inflation (SEE: Canada’s 2016 food price inflation highest in West) in all aspects of daily life and the inevitable spike in interest rates in the coming years, the cost of living for many Canadians will skyrocket over the next decade.
In the last 40 years, because wages have not kept up with price inflation many people turned to credit to maintain the illusion of a middle class standard of living. They have passed this bad financial habit on to their children. We are all working for the company store, BANK.
NO DEPOSIT – NO RETURN
Disposable income? Lol. Sorry if I seem to be among the few who were never duped by schmoozy free-marketing terms to dupe mindless consumers who never stop to think.
“So why don’t you come over here and dispose of some of that extra play money you have hanging around pointlessly in your pocket there, so I can do something constructive with it for once.” Lol! Or go tell a business owner his profit margin is only disposable income and watch the reaction you get. Taking it all out of context, am I? Or do most have no idea what a credible context is??? The latter invariably rings true over time.
JRATT is correct. However legal, the vast majority average wage earner consumer invariably winds up being only part of an elaborate money laundering system for our massive ‘Bank Owned Company Store System’ of capital free market economics.
The majority wage earners NEVER have had any such land of opportunity for The American Dream as popularly advertised and believed for so long by our naive parents and grandparents.
And time’s almost out of gas.
The bankers have bought the politicians and made theft legal.
They pay you .05 percent on your savings and charge you 14 to 24 percent or more on credit card debt.. Credit cards have a 2.84 percent default rate. They claim it is unsecured debt, that is why they have to charge higher interest rates. I received an offer that had a 59 percent interest rate, WTF. But the truth is they can run up a bunch of legal fees go to court and get a judgment against you, if yo do not pay, I once had a $5 check NSF while i was on vacation, 90 days later it made it in front of a judge and cost me $205 to clear up the debt.