HawthorneVillager.com

“In fact, inflation-adjusted non-mortgage consumer credit is now rising at the slowest pace since the early 1990s,” he said. “At this rate of slowing, growth in non-mortgage consumer credit will enter negative territory in the second half of the year.”

Lines of credit are rising by almost 6% annually, now the slowest pace on record. Direct loans, on the other hand, are growing about 1.5% a month, which is unsustainable, Mr. Tal said. Mortgage arrears, at about double the rates seen prior to the recession, appear to have peaked.

Canadians are also spending a greater proportion of their income on interest payments at 7.6%, the highest rate since 2008. This figure has risen by almost 50 basis points in the past year.

Consumer bankruptcies are down more than 20% in the past year. Personal bankruptcies in Ontario are down 30%, the biggest decline in Canada.

Karen Cordes Woods, a financial markets economist at Scotia Capital Markets said the risks of tightening monetary conditions currently outweigh the benefits and she doesn’t think the Bank of Canada will move on rates until the second quarter of 2012.

She said material tightening is being imposed on the economy from fiscal retrenchment and the strength of the Canadian dollar to stricter mortgage lending guidelines and elevated commodity prices that continue to crowd real wage growth despite the improvements in the labour market.

Although there is recent evidence of inflation creeping into the economy, it’s not nearly enough to justify a rate hike and Ms. Cordes Woods believes a move to tighten by the Bank of Canada would only put more upward pressure on the dollar and represent an unwanted headwind for the economy.

“The Bank of Canada still has time to stay on the sidelines,” she said. “They will do what they see fit given the conditions.”

good stuff DTC, i question whether the credit slow down is due to exhaustion or actual frugality.

Hard to tell i guess. i dont see rates moving either.

Growth in consumer credit debt in Canada is no longer outpacing income, and is rising at its slowest pace in a decade.

Excluding mortgage debt, the rate at which Canadians are borrowing money for consumer goods has slowed so much, it is on the verge of entering negative territory, CIBC said in a report on household credit released Thursday.

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“While we were talking about how much debt people have, slowly, without people noticing, we actually started reducing our debt, or slowing the rate at which we accumulate debt, especially in areas that are not related to the housing market, namely what we call consumer credit,” Mr. Tal said.

While consumers are curbing their spending, the Bank of Canada’s business outlook survey, released on Monday, offers signs that businesses will pick up the slack, says Peter Buchanan, CIBC senior economist.

“The early parts of the recovery were driven by the consumer and households. From here, certainly, business spending will be carrying more of the load,” Mr. Buchanan said.

“There are some reasons to think that companies will be hiring more and we may get a bit of offsetting support countering any weakness.”

I think at this point its pretty safe to say what our previous discussions about renting/owning in this current market cant be put to rest.

sorry batman, i dont know what you mean. if you own a house outright you can put all of your money into investments? of course, congrats and thats great.

that has nothing to do with what we are talking about.

it clearly puts the financial side to rest, in todays market Fred? there is no doubt renting is way cheaper.

yeah batman, ok, so the average person it takes 20 years to pay it off at a higher cost than renting.
do the numbers for that on a 325K mortgage, interest etc.

interesting Fred, i have never heard someone remove the principal. why would shiller leave that part out of his equations? Or the NY times rent/own calculator i provided?