Pace of household credit growth hit 2-year high in August

Scotiabank attributed the expansion in total household credit to easier borrowing conditions. The spike in residential mortgage credit growth followed a mid-July reduction in the mortgage qualifying rate, the first cut since 2016. Year-over-year, mortgage loan growth hit a one-year high of 4.0%. 

Consumer credit growth reached a 10-month high of 4.3% month-over-month, but the long-term growth trend remained flat from July at 3.1% year-over-year. 

Although the household debt-service ratio remains at an all-time high — and the debt-to-personal-income ratio remains near its record high — Scotiabank suggested the Bank of Canada would be “unlikely” to raise its key rate as it is currently focused on “preventing the Trump slowdown from spilling over into Canada.”

Read the full report here. 

More women filing for insolvency

As household credit continues to grow, more women are filing for insolvency, according to a study conducted by Hoyes, Michalos & Associates Inc.

The licensed insolvency trustees found that the gender gap in consumer insolvency filings has decreased to almost zero. In 2018, 49% of insolvencies were filed by women, up from 42% in 2012. 

The study also found that women filed for insolvency with less debt than men.

Women had 21% less unsecured debt than men, and an unsecured debt-to-income ratio of 147% — significantly lower than the 177% for male debtors.

“Women face specific financial challenges that increase their reliance on debt yet make that same debt harder to manage,” Doug Hoyes, co-founder of Hoyes, Michalos & Associates, said in a statement.

For example, 26% of the women who filed for insolvency in 2018 were single parents, compared to 8% of men who filed for insolvency. Women were also more likely than men to have student debt (22%, compared to 13%), and more likely than men to be divorced (26%, compared 20%).

On average, women filing for insolvency earned 4.5% less than men.

Read the study here.