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Do Canadians Borrow For Wealth ?

in Bank of Canada

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:

To Purchase SecuritiesConsumer Spending
 Tax Sheltered plansMarketable stocks and bondsPrivate Passenger VehiclesMobile HomesRennovations of residential propertiesOtherSubtotalCredit CardsTotal
2015 QI1,5733,71372,9618143,114291,887368,77575,738444,513449,799
Table C7 : Chartered banks: Quarterly classification of non-mortgage loans (in Millions of Dollars)


  • 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.

    • 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


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