By Nicolas Van Praet, Financial Post

MONTREAL – Canadians are more indebted than ever before but the pace at which they’re borrowing money is slowing.

Despite a reduction in consumer appetite for new credit in the fourth quarter of 2011, consumer debt loads continue to increase but at a much lesser rate than observed in previous years, according to the latest national credit report from Atlanta-based Equifax.

The average debt outstanding by Canadians – which includes credit cards, loans and lines of credit but not mortgages – rose 4.5% during the last three months of 2011, to just under $6,000. That borrowing pace is about half of what it was the year before, when Canadians’ outstanding debt balances grew at a rate of 8%.

“We are seeing that Canadians, even though they are not reducing their debts, they are not increasing them at the same rate as before,” said Nadim Abdo, vice-president of consulting and analytical services for Equifax Canada. “That in itself is a positive.” Read the rest of this entry »

Tavia Grant … From Wednesday’s Globe and Mail

Canadians have set a new record for household debt, a sign that many families are leaving themselves vulnerable to an economic shock.

The debt burden of Canadian households has surpassed levels of both the United States and the United Kingdom and, by at least one measure, they are hurtling toward those countries’ peak levels of 2007, new Statistics Canada data show.

The concern is that any sudden negative event – such as a jump in unemployment, falling house prices or rising interest rates – could put many thousands of families in financial stress. The debt squeeze also suggests that consumer spending will be muted in the year to come, putting a damper on economic growth.

The ratio of debt to personal disposable income hit a high of 152.98 per cent in the third quarter from 150.57 per cent in the prior three months, Statscan said Tuesday. The report comes as Bank of Canada Governor Mark Carney is again sounding the alarm over swelling household debt. “Our greatest domestic risk relates to household finances,” the central banker said in a CBC radio interview.

Roughly one in 10 Canadians is in a vulnerable financial position, Read the rest of this entry »

By Greg Quinn
Bloomberg

Canada’s economy is slowing because of weaker foreign demand and may need new stimulus from the central bank and government if things get worse, the Organization for Economic Cooperation and Development said.

Gross domestic product will grow 1.9% next year, the Paris-based OECD predicted Monday, down from its May forecast for a 2.8% expansion. The outlook for this year was pared to 2.2% from 3% in May, and it estimated 2013 growth of 2.5%.

Finance Minister Jim Flaherty said last week he may offer additional stimulus if required, adding the risks to the global recovery from Europe’s debt crisis are increasing. Bank of Canada Governor Mark Carney has kept his key lending rate at 1% since September 2010 and has said the economy won’t fully recover until well into 2013.

“Output is projected to expand at a slow pace as exports are restrained by sluggish external demand,” the OECD report said. “Domestic spending should sustain growth but at a moderate rate, as high debt and waning sentiment curb consumption growth.”

Consumers may be discouraged from spending by debts that are a record 150% of disposable income and by a weak job market marked by government cutbacks and slow private hiring, the OECD said. Unemployment will be little changed next year at 7.3% from this year’s 7.4% according to the report.

“Risks are skewed to the downside,” the OECD said, and if they materialize “the Bank of Canada should ease monetary policy via further interest rate cuts, which in a downside scenario would be consistent with the inflation target.”

The Bank of Canada has predicted inflation will slow to 1% in the second quarter of next year from 2.7% this quarter. The bank acts to keep inflation in the middle of a 1% to 3% band.

TORONTO, Nov. 9, 2011 /CNW/ – Canadians have heard the many cautions about carrying too much debt and are taking action to insulate themselves from future economic downturns, according to the seventh Annual State of the Residential Mortgage Market report by the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.

Highlights:

*   About one-third (32 per cent) of homeowners with mortgages had some mortgage activity in 2011, with 23 per cent renewing or refinancing their mortgage
*   Fixed rate mortgages remain most popular (at 60 per cent), while 31 per cent have variable rate mortgages
*   Among those who renewed their mortgage in the past 12 months, 78 percent saw a reduction in their rate
*   Among those who renewed or refinanced their mortgages in the last year, 21 per cent changed lenders
*   Levels of equity takeout have dropped in 2011 – only 10 per cent of mortgage holders took out equity in the last year, a 40 per cent drop from 2010

“Overall, our survey paints a picture of Canadians generally and homeowners in particular as very focused on their finances. They are planning ahead, aggressively paying down their mortgage in advance of any further economic jolt,”" said Jim Murphy, AMP, President and CEO of CAAMP. “Prudent is the word that best sums up how Canadians are feeling at this time.”

Canadians secure in their own positions; skeptical about others

The 2011 survey found an interesting contrast between individuals’ own debt levels and their feelings towards other Canadians’ financial positions. Forty-six per cent of respondents agreed that “as a whole, Canadians have too much debt” and many believe that “low interest rates have meant that a lot of Canadians, who probably should not have, became homeowners over the past few years.”

However, among those with a mortgage, most disagree with the statement “I regret taking on the size of mortgage I did” and a substantial number agree that mortgage debt is “good debt.” Canadians also agree overall that “real estate in Canada is a good long-term investment.”

And, despite being concerned about overall debt levels of Canadians, they believe that they personally have acted responsibly.

Canadians could weather a potential storm

Canadians have insulated themselves by shopping for the best interest rates with the help of a mortgage broker whose market share has increased. Among those who renewed a mortgage in the past year, the number who switched lenders was up to 21 per cent in 2011. At the same time, three quarters of Canadians who renewed or refinanced their mortgage this year saw a decrease in their mortgage rates. For a five year fixed rate mortgage, the average discount has been 1.46 per cent during the past year. And fewer Canadians have taken out equity, down to 10 per cent in 2011.

By comparing rates with different mortgage lenders, aggressively paying down their mortgages, and decreasing the amount of equity they take out of their mortgages, most Canadians appear to be in a comfortable position to weather the economic challenges ahead. In fact, eighty-four per cent of mortgage holders said they can handle an increase of $200 per month in their mortgage payments, and 78 per cent have at least 25 per cent equity in their homes.

“Despite less than positive feelings towards the economy, or maybe because of that, Canadians are showing a level of prudence in their decisions that is inspiring,” said Murphy. “That suggests to us that there is no need for policy makers to introduce new measures that would reduce housing activity.”

The report is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October 2011.

The CAAMP survey report contains a wealth of industry information, including consumer choices and borrowing behavior, opinions on current “hot topics” related to housing and mortgages, regional breakdowns of responses, and an outlook on residential mortgage lending. For a copy of the report, please visit www.caamp.org<http://www.caamp.org>.

About CAAMP

Established in 1994, the Canadian Association of Accredited Mortgage Professionals (CAAMP) is Canada’s national mortgage industry association. CAAMP has assumed a leadership role in the industry it serves and has set the standard for best practices for Canada’s mortgage practitioners. In 2004, CAAMP created the Accredited Mortgage Professional (AMP) designation as part of an ongoing commitment to increasing the level of professionalism in Canada’s mortgage industry.

As a membership-based organization, CAAMP strives to develop its network of professionals and to represent the interests of these individuals to government, media and consumers. CAAMP has attracted 12,500 members and 1,700 companies from across Canada – representing over 90% of Canada’s mortgage activity. CAAMP members make up the largest and most respected network of mortgage professionals in the country. CAAMP’s membership base consists of mortgage lenders, brokers, insurers and other industry participants.

Tavia Grant, Globe and Mail Update Published Friday, Nov. 04, 2011 7:04AM EDT

The Canadian economy unexpectedly shed 54,000 jobs last month, the most since 2009, a sign faltering business and consumer confidence is slowing the pace of hiring.

All the losses were in full-time positions, Statistics Canada said Friday. The number of full-time workers tumbled by 71,700 in October, with many in manufacturing and construction in central Canada. The country’s jobless rate rose two notches to 7.3 per cent.

The second drop in three months, after a year of fairly steady hiring, suggests global economic woes and market volatility are weighing on Canadian employers. Several economists, and the Bank of Canada, have cut their forecasts for economic growth in recent weeks.

“Suddenly the jobs market doesn’t look quite so rosy in Canada,” said Avery Shenfeld, chief economist at CIBC World Markets, in a morning note. “Canadian employment was weak across the board in October.”

Among sectors, natural resources was the only industry to post notable gains for the month, the agency said. The private sector shed 32,000 positions and the public sector eliminated 3,800 jobs.

The Canadian dollar shed more than a full cent after the report, sliding to 98.10 cents (U.S.) from Thursday’s close of 99.20 cents.

The most worrisome sign is that wage growth is slowing, to 1.3 per cent from a year ago, noted Bank of Nova Scotia economists Derek Holt and Karen Cordes Woods. “Swings of tens of thousands in the monthly job count matter far less than the fact that the millions of employed Canadians are just not making wage gains that are keeping up with the cost of filling their grocery carts, fueling their cars and what they’re spending on other staples,” they said.

That translates into wage reductions in real terms, which will weigh on Canadian consumers and dampens the outlook for consumer spending, they added.

Central Canada felt the brunt of the losses. Employment fell in Ontario, Quebec, British Columbia, Nova Scotia and Prince Edward Island, while it grew in Newfoundland and Labrador.

The losses comes after steady job growth through much of the past year. Total employment has risen 1.4 per cent, or by 237,000 jobs in that time. Full-time employment has grown 1.6 per cent in the past year, despite October’s loss. Part-time employment rose by 17,700 last month and is little changed over the past 12 months.

Jobs numbers are subject to monthly volatility, but losses of this magnitude are “extremely rare,” aside from recessionary periods, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. In fact, the last such hefty job drop outside of recession was in September 1996, he added.

“No question, this is an extremely loud warning shot for the economy.”

Last month’s job losses were the most since February, 2009. Economists had expected 15,000 new positions, with the jobless rate staying put at 7.1 per cent.

Job losses among youth caused their unemployment rate to rise a notch to 14.1 per cent. Youth aged 15 to 24 have the highest jobless rate of any age demographic.