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February 11, 2015

Here are a few interesting numbers revealed by the "Institut de la statistique du Québec" (Statistics Quebec) in a study published on February 6, 2015.

  1999 2012 Increase
Debt ratio 35% 160% + 4.5 times

Total amount in mortgages for Quebecers

85 billion 185 billion + 2 times

Total amount of consumer credit for Quebecers

19 billion 59 billion + 3 times
Percentage of Quebecers over
65 years old with debt
28% 45% + 60%

 

These numbers demonstrate three important realities. 

First, mortgages have risen rapidly, which can lead one to believe an increase in collective wealth given that more people are owners, compared to 1999, and that there is an increase in the value of the houses purchased.  While this is true, on the flip side, recent home buyers, or those who have just refinanced, will be more at risk when interest rates rise.

Secondly, debt ratio linked to consumer spending (rather than purchase of durable goods) very rapidly, even more striking is the fact that this rise is much stronger in Quebec than in Ontario, where the growth was less than 35%. Knowing that this type of credit is not linked to durable goods and that interest rates for this type of debt is higher than a mortgage, these numbers indicate that Quebecers carry a burden that reduces at an increasingly important portion of their income.

Thirdly, we notice a sharp rise in the proportion of 65 and older who reach retirement age with debts. Today's “baby boomers” are the first consumers who were exposed to the omnipresence of consumer credit. Unfortunately, these numbers show that many have not known how or been able to eliminate their debts by the time they hit retirement. This statistic most likely explains the reason why this age group is the only one where the rate of consumer proposals and bankruptcies has increased for the past 5 years.

These numbers remain averages and each of us is responsible for our own finances. Where do you find yourself on the debt ratio scale? Take 5 minutes to calculate it at http://jeanfortin.com/en/assess-your-situation/are-you-in-over-your-head

Do you have a question? Do not hesitate to contact us at 1 877 442-5015, ext. 4915 and we will be happy to help!

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