Loans Canada CEO, Scott Satov on BNN Bloomberg to discuss Statistics Canada’s most recent report on household debt in Canada.
Scott Satov examines how the Bank of Canada’s 7th consecutive raise of its overnight rate coupled with inflation has affected Canadian household debt in 2022. Looking at the summary report by Statistics Canada, the ratio of debt-to-household income stands at 183%. Meaning that for every dollar of disposable income the average Canadian has, they owe $1.83 in debt. The latest rise in Interest rates continues to worry Canadian households who are already battling a record 40-year-high inflation rate. With expectations of a recession looming, Satov examines how consumers can stay ahead and afloat.
Household Debt Profile
- Canadian households now hold $2.8 trillion in debt.
- Non-mortgage debt totalled $722.6 billion.
- Debt-to-household income ratio is now 183%.
- household debt service ratio is at an all-time high of 14% (disposable income being used to cover debt).
Interest Rates and Inflation:
- December 7th, the Bank of Canada raised the overnight rate by 50 basis points bringing the overnight rate to 4.25%.
- The Canadian prime rate is now 6.45%.
- The Consumer Price Index (CPI) inflation remained at 6.9% in October.
Scott Satov’s Tips On Managing Debt
- Get your financial house in order:
- Get your free credit score at least once a year and review your file.
- Make a list of your debts: how much you owe, your current interest rate on your loans, type of loan (variable rate, fixed, mortgage, credit card.)
- Pay off high-interest debts first to reduce your overall debt burden.
- Pay down variable rate debt to avoid further increases to your borrowing costs.
