Canada Household Credit Expands at Slowest in 30 YearsTheophilos Argitis
Canadian household credit grew at the slowest pace in 30 years in October as the nation’s consumers seek to pare record debt levels.
Total household credit in October expanded by 3.7 percent from the same month in 2012, according to the Bank of Canada’s household and business credit indicators report. That’s down from 3.9 percent last month. The October pace was the slowest since July 1983, according to Laura Cooper, an economist at Royal Bank of Canada in Toronto.
The data support Bank of Canada Governor Stephen Poloz, who pointed this month to a “constructive evolution” of household debt. Policy makers have warned about a housing bubble as consumers took advantage of historically low interest rates to obtain mortgages.
The central bank, which had suggested since April 2012 that the next move for its policy interest rate would be an increase, dropped its so-called bias last month amid persistent economic slack and low inflation.
Slowing household credit growth “is supportive of the current policy stance of the Bank of Canada,” Cooper said in a telephone interview.
Credit-market debt such as mortgages rose to 163.4 percent of disposable income, compared with a revised 162.1 percent in the prior three-month period, Statistics Canada said in a Sept. 13 report. Mortgage borrowing rose 1.7 percent.
Growth in residential mortgage credit in October fell to 4.8 percent from a pace of 4.9 percent in September, according to Bank of Canada data.