Debt for days

Average Canadian family is $96,100 in debt


That’s gotta hurt! According to a study released Tuesday by the Vanier Institute of the Family, the average Canadian family has a whopping $96,100 worth of debt. Or, measured another way, that means the average debt-to-income ratio for Canadian families is 145 per cent. And that’s not all. The study found a 50 per cent increase in mortgage payments that were more than 90 days late (compared to 2008). There was also a 40 per cent increase in credit card holders more than three months behind in payments. “For far too many, there is too little income, too much spending, too little saving and too much debt,” the report read. On Tuesday, Finance Minister Jim Flaherty announced a new scheme to make it harder for Canadians to take out mortgages: an effort to prevent unwieldy household debts from piling up.

CBC News

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Debt for days

  1. And it is the government's business how much debt individuals choose to accumulate why, exactly? Since when should the government be deciding who gets mortgages?

    • They are just trying to manage their employees/tax payers well.

    • Actually just "government backed" mortgages, so this is not the overreach I took it to be.

    • We need only look to the events of last year to see why setting some basic rules for financial institutions when leading money for mortgages is a really good idea.

      Nothing that says you can't arrange a non-bank or accredited finanacial institution loan to buy your house, after all.

      • Actually I think there are two directions one can go. The first, as you say, is to set rules for the lending practices of financial institutions. The other is to let them fail rather than trying to prop them up when they make huge mistakes.

        The former assumes government knows better. A questionable assumption.

        The latter assumes that financial institutions will cull themselves (i.e. the badly run will die, leaving the best). I think this is a better assumption.

        • I should think the results in Iceland or Argentina should serve as a demonstration of what happens when you let private enterprise take the helm without sensible legislation holding them back.

          See the economic theory of "just let them do what they want and the bad ones will faill" is just fine so long as it doesn't become reality. When it becomes reality, the real people it effects don't just conveniently disappear into the theoretical ether. They still exist and have families to shelter and feed, and if they can't find legitimate ways to do that, you can be sure they'll find illegitimate ways.

    • Because the rate of savings is linked to the economic growth, which is, kinda, important for like… everything.

  2. Is that average or median? If three people are carrying debt in the billions and that's just an average we could easily be OK.

    I expect it's not the case, however.

  3. When you factor in the obscene level of taxation and the overall cost of living, it should come as no surprise that many Canadians have to go into dept in order to live a decent lifestyle! And I would venture to predict that it will not be long before owning a house will be out of reach for many Canadians. Example: here in Edmonton you have to pay $220,000 and up for a 30 yr old Townhouse? Disgusting!

    • That all depends on what you consider a "decent" lifestyle to be.

  4. in Vancouver you can expect to pay 300k just for an apartment condo… that is only acceptable if you assume the price is going to keep climbing

    • It is a fluke of the past 10 years or so where real estate looked to people like a good investment (http://www.pyrosoft.co.uk/blog/wp-content/uploads

      Be glad that, unlike the money you spend on food, clothes and cars, at least a house is an inflation-proof asset you will always have and can live in. I might get a higher return from a stock, but I can't live in a stock. Indeed, once people start thinking of homes as a place to live – their fundamental value – housing prices will come down as they should

    • Sorry, here is the link I wanted to show. Even just by showing the last 35 years you can see what an aberration the 90's were, and the link between rising prices and coming recessions.


      • in some cases it would make sense to rent and then use what you saved by not buying and put that into the stock market

        • Given the current interest rates, you're not going to save much by renting these days. And putting your to-be-downpayment into the stock market strikes me as a pretty risky gamble.

  5. But but… real estate prices are too high! But but… I need a "decent lifestyle". What a bunch of babies people have become. We are so used to rising standards of living that cutting back just a little seems like a hardship. It looks like people (including many in this thread) have lost their ability to economize. The world does not owe you a home, or a plasma-screen tv. Making sacrifices to get some of those things (or making sacrifices so you can afford to live in an expensive city) is probably better for you anyway, because it forces you to think about what you really need.

    If people learned simply to delay gratification they would get a lot more in life. If you have a 30-year $300,000 mortgage at 6%/year congratulations. You will pay out about $650,000 for your $300,000 home. If instead you socked away $15,000 a year (less than the mortgage payments on that 30 year mortgage) and were able to get a 5% return, you would have 308,000 in 14 years. Yes you would be paying rent (which is why I'd want to save more than that) but unless your rent is over $2000 a month (and if that is a case you are spending too damn much) you will come out ahead from a strategy of saving to buy a home, instead of buying it with a mortgage that doubles the price of the house.

    • Yeah, but you're assuming the market stays level. Your 300,000 home in 14 years isn't going to be 300,000 anymore.

      Part of the reason for this blip is that people have been seeing house prices sky-rocket, and hear the CREA consistently blowing smoke about how the market is always getting stronger, and you start to think that in 14 years you're going to need 500k or more to purchase what was that 300k house, and had you already bought it, you'd have gained that equity instead of watching it disappear.

      Now, is that view legit? I have serious doubts.. but I can certainly understand those who believe it is. And because of that, I think villifying people as "babies" who want to move now is undeserved.

  6. For some reason, everyone seems to believe we can talk about the real estate market as if it exists in a vacuum. As long as we are active participants in "free trade" decent housing will continue to be out of reach for lower middle class people.

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