More than one-tenths of households with debt missed or were late in their payments
A growing portion of Canadian households are finding it harder to service their assortment of debts, according to new data from Statistics Canada’s latest Survey of Financial Security.
Among those who hold debts, around 11% missed or paid late their non-mortgage bills in 2018. Meanwhile, among those with just mortgages, approximately 4% skipped or delayed their payments.
Measuring in terms of debt-to-asset ratios, StatsCan numbers covering Q4 2016 showed that around 7% of households with a DTA of less than 25% had late or missed payments. For those with a DTA between 25% and 50%, around 11.5% had delayed debt servicing.
The ones that struggled the most in the last quarter of 2016 were those with a DTA greater than 50%; among these households, 16.1% struggled with servicing debts on time. And the budget tightness implied by these findings has only intensified, as the debt-to-asset ratio of an average household has grown by 4.41% since then.
“Canadians are falling behind on bills, and it gets worse as they assume more debt,” Better Dwelling explained in its analysis of the figures. “People are shifting their debts around, but not actually making much progress.”
Recent employment figures might offer a sliver of hope, however, with Canadian markets likely to expect stronger consumer purchasing power.
Unemployment reached a record 5.6% in May, the lowest reading by StatsCan since 1976. The same month also saw the addition of 27,700 new employees nationwide, bringing the 12-month total increase ending May to 453,100.
Said gains represented a 2.4% year-over-year increase, which was the largest annual growth since before the recession a decade ago. Over the last two years, almost 700,000 new jobs have been added to the economy, largely due to the influence of service-related industries such as technology and transportation.
StatsCan noted added that these trends will feed into greater stability in the housing and export sectors, as well as much improved pace in the national economy’s growth. Experts’ estimates put growth at over 2% on an annualized basis in Q2 2019.