Do Canadians Borrow For Wealth ?

The Bank of Canada (and Stats Canada as well) put out a withering barrage of information every month, that I don’t even try to keep up with, but on occasion I am motivated to go over and check things out, and sure enough, this month I found some very interesting information in the Bank of Canada Banking and Financial Statistics June 2015. Be warned this is a PDF file with over 100 pages of tables and data, but the one table that caught my eye was Table C7 : Chartered banks: Quarterly classification of non-mortgage loans  (I have included a somewhat transcribed version at the end of this article).

As with all data, many different lemma, theories and ideas can be implied or inferred, but I will attempt to make two simple comparisons:

  • Borrowed money for investing compared to Car Rentals
  • Investing vs. Funds held on Credit Cards

Here are two harder to read graphs, that show the trends for the past 10 years (including Q1 in 2015), the big table of the real data is at the end of the article (as well).

Credit and Lease Debt

Car Leases and Credit Cards are what we borrow for (not to build wealth)

If you can make out the colours and such, you will see the really big increase in Credit Card and Vehicle Debt over the 10 years and the very small increase in loans to borrow for RRSPs and General investing. I am not really a big fan to borrow to build wealth, and it seems most Canadians don’t think of that, but holy cow, we do want to borrow to buy “things” like Vehicles, Mobile Homes and “stuff” on our Credit Cards.

The numbers are telling:

  • Private Passenger vehicle loans in 2005 were about $15,577,000,000 but now they are $72,961,000,000 almost quintupled over 10 years (2 complete doublings)
  • For Credit Cards $38,922,000,000 in 2005 but by 2010 $75,738,000,000 almost 1 complete doubling in 10 years.

What does this really mean? I guess we Canadians love our cars, love our stuff, and are wary of borrowing money to invest? (yes an over simplification, but the numbers do seem to point in that direction.

 The Big Table from the Bank of Canada

I do suggest having a look at this data on line as well:

Table C7 : Chartered banks: Quarterly classification of non-mortgage loans
Millions of Dollars
Loans to Canadian individuals for Non-Business Purposes
To Purchase Securities To Purchase Consumer Goods and other Personal Services Total
Tax Sheltered plans Marketable stocks and bonds Private Passenger Vehicles Mobile Homes Rennovations of residential properties Other Subtotal Credit Cards Total
V33760 V37759 V37755 V37756 V37757 V37758 V37754 V37753 V37752 V37751
2005 1,262 3,476 15,577 460 2,824 146,231 165,092 38,922 204,014 208,752
2006 1,300 3,714 16,218 422 3,178 158,824 178,642 41,998 220,640 225,654
2007 1,183 3,876 17,311 388 3,721 178,768 200,188 50,638 250,826 255,885
2008 1,099 3,220 23,002 370 4,903 207,126 235,401 53,703 289,103 293,423
2009 1,306 3,531 33,870 372 3,848 235,530 273,620 57,792 331,412 336,249
2010 1,326 3,789 42,095 200 3,618 247,113 293,027 61,325 354,352 359,468
2011 1,242 3,515 49,347 188 3,328 274,229 327,091 81,811 408,902 413,658
2012 1,487 3,521 54,992 242 3,774 285,252 344,260 78,969 423,229 428,237
2013 1,345 3,067 63,862 258 2,569 291,899 358,589 76,886 435,475 439,886
2014 1,070 3,628 71,981 829 3,155 291,750 367,715 79,046 446,761 451,459
2015 QI 1,573 3,713 72,961 814 3,114 291,887 368,775 75,738 444,513 449,799

{ 2 comments }

{ 2 comments… add one }
  • Matt July 6, 2015, 11:50 AM

    I have to say that these stats are just down right frightening; I can’t see how justifing that much in the way of a car loan can be even remotely good. I’m struggling to justify less than half the price and I won’t even start on the credit card debt because that might make me break out in hives.

    Reply
    • bigcajunman July 6, 2015, 12:34 PM

      Yes, initially when I looked at the numbers, I thought I was misunderstanding what I was seeing, but I think it is what I see.
      I do like this flowchart

      Reply

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