{"id":483986,"date":"2022-08-11T14:31:26","date_gmt":"2022-08-11T11:31:26","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/howd-we-get-into-so-much-debt\/"},"modified":"2022-08-11T14:31:26","modified_gmt":"2022-08-11T11:31:26","slug":"howd-we-get-into-so-much-debt","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/howd-we-get-into-so-much-debt\/","title":{"rendered":"#How\u2019d we get into so much debt?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2f2f4a89337\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2f2f4a89337\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/howd-we-get-into-so-much-debt\/#%E2%80%9CHowd_we_get_into_so_much_debt%E2%80%9D\" >&#8220;How\u2019d we get into so much debt?&#8221;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CHowd_we_get_into_so_much_debt%E2%80%9D\"><\/span>&#8220;How\u2019d we get into so much debt?&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n                            What&#8217;s contributing to Canadians\u2019 debt loads lately? Mortgages, of course, but credit-card debt is also on the rise.\n                        <\/div>\n<div>\n<div id=\"attachment_1238575\" style=\"width: 328px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" data-sizes=\"auto\" class=\"wp-image-1238575 lazyload\" src=\"https:\/\/www.macleans.ca\/wp-content\/uploads\/2022\/07\/KaryneCharbonneau-v-3.jpg\" alt=\"Karyne Charbonneau is executive director and senior economist at CIBC Capital Markets\" width=\"318\" height=\"346\"\/><\/p>\n<p class=\"wp-caption-text\">Karyne Charbonneau is executive director and senior economist at CIBC Capital Markets<\/p>\n<\/div>\n<p>Canadians have been in debt for a few decades now: the last time the national debt-to-disposable-\u200bincome ratio was even was in 1994. In the first quarter of 2022, Canadians owed $1.83 in debt for each dollar they made in a year. That\u2019s very close to the all-time record of $1.85 in 2021.<\/p>\n<p>The pandemic didn\u2019t do much to alter the upward trajectory of our debt, but it has changed the composition of it. Consumer debt went down as Canadians made fewer purchases while tr<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ed indoors. Households saved a total of $300 billion that they probably wouldn\u2019t have without COVID restrictions.<\/p>\n<p>On the other hand, mortgage debt ballooned along with the price of housing. Between 2020 and 2021, Canada\u2019s mortgage load rose by $185 billion\u2014the biggest year-to-year jump in more than a decade. In fact, about three-quarters of Canadian household debt now is due to mortgages. In recent months, inflation has further tightened Canadians\u2019 margins, raising the price of everyday essentials. As a consequence, credit-card debt, which was decreasing during the pandemic, is now on the way up again. In February, households held about $83 billion in credit card liabilities with chartered banks, an increase of 11.6 per cent from a year earlier. This is to be expected, given that wage growth isn\u2019t keeping up with inflation. Between the expensive housing market and the rising cost of living, some people can\u2019t weather the storm. We may see more Canadians defaulting on their credit debt in the months ahead.<\/p>\n<p>Even as these delinquencies increase, it\u2019s important to look at the big picture. The good <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> is that consumer-credit levels are still well below pre-pandemic levels. Still, the combination of inflation and housing prices means Canadians must be more thoughtful about how they borrow. It\u2019s possible that people will become more inclined to keep their money now that they\u2019re aware that a shock of pandemic-level proportions could happen at any time. On the flip side, the fact that the federal government stepped in with income subsidies during COVID might tell people that they have safeguards to buffer these shocks, encouraging some Canadians to borrow just as much as before.<\/p>\n<p>Another piece of good news is that, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly speaking, our balance sheets are not that bad. The average Canadian household has a lot of debt, but also has plenty of assets\u2014especially in real estate\u2014which counts for a lot. There are risks, of course. A large correction in the real estate market could be a problem for many people, particularly highly leveraged recent home buyers. Debt is so closely linked to housing that if prices come down, people will lose money in assets\u00a0<i data-stringify-type=\"italic\">and<\/i>\u00a0their debt won\u2019t go away.<\/p>\n<p>In the long term, the federal government estimates Canada needs to double the pace of building in the next decade. At CIBC, our forecasting predicts that the Bank of Canada\u2019s policy rate will peak at three per cent. That number should be enough to get inflation under control; after all, the world is different than it was in 1990. Regardless, Canadians will need to brace for higher interest rates and be mindful of their financial weaknesses.<\/p>\n<hr\/>\n<p><em>This is part of the Maclean\u2019s Guide to the Economy, which appeared in the September 2022 issue. Read the rest of the package, order your\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/canadianmags.ca\/products\/macleans-september-2022\">copy of the issue<\/a>, and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/secure.macleans.ca\/\">subscribe to the magazine<\/a>.\u00a0<\/em><\/p>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/canadianmags.ca\/products\/macleans-september-2022\"><img loading=\"lazy\" decoding=\"async\" data-sizes=\"auto\" class=\"aligncenter wp-image-1238850 lazyload\" src=\"https:\/\/www.macleans.ca\/wp-content\/uploads\/2022\/08\/SeptemberCover-1.jpg\" alt=\"\" width=\"287\" height=\"391\"\/><\/a><\/p><\/div>\n<p><script async defer crossorigin=\"anonymous\" src=\"https:\/\/connect.facebook.net\/en_US\/sdk.js\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/www.macleans.ca\/economy\/canadian-economy-guide-2022-debt\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;How\u2019d we get into so much debt?&#8221; What&#8217;s contributing to Canadians\u2019 debt loads lately? Mortgages, of course, but credit-card debt is also on the rise. Karyne Charbonneau is executive director and senior economist at CIBC Capital Markets Canadians have been in debt for a few decades now: the last time the national debt-to-disposable-\u200bincome ratio was&#8230;<\/p>\n","protected":false},"author":1,"featured_media":483987,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/www.macleans.ca\/wp-content\/uploads\/2022\/08\/kc_social-766x431.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[132264],"class_list":["post-483986","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-guide-to-the-economy-2022"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/483986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=483986"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/483986\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/483987"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=483986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=483986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=483986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}