Despite the nonsense that our Bank of Canada and Minister of Finance is telling us, Canadians don’t have a debt problem.
According to Equifax, the consumer credit rating agency, serious delinquencies on non-mortgage credit (credit cards), hit an all-time low of 1.19% in the fourth quarter of 2012. Also at a record low, according to StatsCan, is our debt-service ratio. This is our monthly interest payments as a proportion of disposable income. It is currently at 7%.
Of course, consumers will borrow more when interest rates are low. It is a far better idea to borrow when interest rates are low than when they are high. So, for instance, if someone was thinking of renovating a kitchen now versus 3 years from now, it makes prudent, fiscal sense to borrow at all-time low-interest rates. Canadians are behaving as they should. Now is a great time to borrow money. Just make sure you can qualify to service the debt, something that Canadians clearly are showing they can do.
I don’t know about you, but I am getting tired of Mr. Flaherty’s constant comments to the media about a fantasy consumer debt problem.