It’s hardly news that Canadians have a debt problem, but new data suggests citizens might be turning a corner on their credit addictions.
According to a new poll from the Royal Bank of Canada (RBC), more Canadians are debt free this year than in 2011. The RBC reports that 26 percent of respondents had no personal debt, four percent higher than last year.
More people consuming responsibly and living within their means – that’s a cause for celebration, right?
Well, before you go out and buy a celebratory butter tart (with cash, not plastic), the RBC also reports that these figures don’t include mortgage debt. Overall, the poll found that Canadians have $13,141 in non-mortgage debt on average, an increase from last year.
Figures showed that Ontario residents were in the lead with $15,361 while residents of Quebec took up the other end of the spectrum with $10,171.
While these numbers might not fill you with hope, the RBC poll did find some encouraging trends when it came to shifting attitudes toward debt.
The majority of respondents said it’s more important to pay down debt than to save, while 40 percent said they were comfortable with their current level of debt, a decrease of 5 percent from last year.
In the wake of this week’s report from the International Monetary Fund (IMF), which concerned borrowing trends in Canada and how they could affect the economy, it’s refreshing to see that more citizens are taking their debt seriously.
“An important domestic vulnerability in Canada relates to the housing market,” the IMF said in its report. “A sharp or sustained decline in house prices could seriously set back the leveraged household sector and domestic demand.”
With mortgage rates at historic lows, many prospective homeowners rushed to buy their first homes or upgrade to new ones, a trend Finance Minister Jim Flaherty hoped to offset by adding new restrictions to mortgage insurance. As of now, those regulations appear to be working.
According the the Canada Mortgage and Housing Corporation, September housing starts decreased by three percent from the previous month.
“The gradual cooling will likely persist given the sales slowdown currently taking place in a number of major markets,” wrote Robert Kavcic, economist for the Bank of Montreal, in a letter to clients.
Between the cooling of the housing market and a seemingly growing trend of debt responsibility from the general public, there’s no reason that the Canadian economy can’t continue its gradual progress toward pre-recession levels.
Dealing with debt can be a hard proposition. Just remember, admitting you have a problem is the first step to recovery.