Every age group in Canada reined in the pace at which they piled on debt last year, with one notable exception: the 65-plus crowd.
Household debt across the country grew at the slowest pace last year since 2003, a report by Toronto-Dominion Bank shows. The bank then examined debts loads by province and age group and found considerable variation. The pace of debt accumulation cooled for all age groups, except for people over the age of 65 who boosted their debt loads by 15 per cent. And nowhere is the run-up in debt loads faster than in Alberta.
The analysis comes as Canadian household debt levels remain at lofty levels – higher than those of the U.K. and the U.S. – even as the rate at which Canadians are adding new debt has cooled markedly. The Bank of Canada has long said high household debt is the top domestic risk to the global economy, though this week Governor Mark Carney said it’s encouraging that people “are listening” to his warnings about taking on more debt.
“The slowdown in debt growth is occurring most notably among age groups and provinces with relatively high levels of indebtedness,” said the TD report, which was based partly on findings from an Ipsos Reid survey. “The slowing in debt growth is encouraging, however, there is a concern that Canadians are entering retirement more financially vulnerable than they have in the past.”
By province, the bank found that people in Ontario “appear to be making a particular effort to reduce debt” while indebtedness in Alberta galloped ahead, likely because of hotter a labour market and strong home sales.
By age group, older people are leading the country’s debt growth. Average borrowing among those 65 and older rose the most in Ontario, Alberta and Quebec last year.
All told, households in the 65-plus group took on almost $6,000 in new debt, on both discretionary and non-discretionary items. The value of assets, including real estates, was little changed last year, indicating “further deterioration” in their financial positions last year.
Older Canadians still have the lowest level of debt loads in Canada, but the new figures “add credence to the recent theme that Canadians are entering retirement more indebted than ever.”
The findings are based on a survey of about 12,000 Canadian households – a solid response though TD cautioned that some of the data for the Atlantic provinces and Prairies is based on small sample sizes.