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Economy Low borrowing rates spur Canadians to add to mortgage debt in May

Credit cards are displayed in Montreal on December 12, 2012.

Ryan Remiorz/THE CANADIAN PRESS

Canadians added to their mortgage debt amid continued bargain-basement borrowing rates in May, but the overall trend in household debt continued its recent moderation in the month, new Bank of Canada statistics show.

The central bank's monthly credit-conditions statistics, released publicly on its website Monday, showed that total Canadian households debt was $1.835-trillion at the end of May, up at a 4.7-per-cent annualized pace. The rise was led by residential mortgage debt, up 5.5 per cent annualized. Mortgages account for about 70 per cent of all Canadian household debt.

Consumer credit – which includes credit cards, car and other personal loans, and personal lines of credit – rose a more modest 2.8 per cent annualized in the month.

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Total household debt was up 4.8 per cent from a year earlier – matching April's pace, which was the highest since the end of 2012. But the rolling three-month average for debt growth, an indication of the prevailing trend, continued to moderate. Three-month average growth was 4.5 per cent from a year earlier, the third straight decline and the slowest pace in nine months.

Three-month average growth for mortgage debt dipped to 5 per cent, the lowest in 10 months.

Business debt continued to accelerate: Three-month average growth was a brisk 12.3 per cent from a year earlier, the fastest in nearly 15 years. Business debt grew at a 6.6-per-cent annualized rate in May, to a total of $1.681-trillion. On a year-over-year basis, business debt was up 8.3 per cent, down slightly from the recent post-recession highs.

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