Do Canadians borrow for wealth? The Bank of Canada (and Stats Canada) also put out a withering barrage of monthly information that I don’t even try to keep up with. On occasion, I am motivated to go over and check things out. This month, I found some fascinating information in the Bank of Canada Banking and Financial Statistics in June 2015. Be warned this is a PDF file with over 100 pages of tables and data. Still, 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 lemmas, 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 ten years (including Q1 in 2015), the big table of the actual data is at the end of the article (as well).
If you can make out the colours and such, you will see the massive increase in Credit Card and Vehicle Debt over the ten years and the tiny increase in loans to borrow for RRSPs and General investing. I am not a big fan of borrowing to build wealth, and it seems most Canadians don’t think of that, but 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 mean? Canadians love our cars and stuff and are wary of borrowing money to invest? (yes an oversimplification, but the numbers seem to point in that direction.
The Big Table from the Bank of Canada
I do suggest having a look at this data online as well:
|To Purchase Securities||Consumer Spending|
|Tax Sheltered plans||Marketable stocks and bonds||Private Passenger Vehicles||Mobile Homes||Renovations of residential properties||Other||Subtotal||Credit Cards||Total|
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.
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