British Columbians living in Metro Vancouver, Greater Victoria and the Okanagan are among the most financially stressed Canadians with mortgage and credit card debt weighing heavily, according to a new survey.
The study by Savvy New Canadians drawing on Canada Mortgage and Housing Corporation ranks Vancouver Census Metropolitan Area as the region with the highest per capita consumer debt in Canada with just under $361,000, followed by Victoria CMA with just under $306,000. Kelowna CMA, Canada’s fastest growing region, ranks sixth in the country with a per-capita debt of just over $112,000.
The study broadly links rising consumer debt in British Columbia (and Canada as a whole) with declining housing affordability as mortgage-related debt has risen. According to the study, mortgage debt has contributed to overall consumer debt by almost 23 per cent because of limited housing supply and increased borrowing capacity.
“Limited supply of housing in some areas of Canada has led to increased competition among buyers, driving up prices and leading to more borrowing,” it reads.
In fact, almost 75 per cent of all Canadian household debt is tied to housing as Canadians hold more debt than their peers in G7 countries, where housing is generally less expensive than in Canada relative to income.
“Population growth and immigration have further intensified housing demand, exacerbating the housing market’s competitiveness,” it reads.
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The Savvy New Canadians survey appears during a period of declining but still high inflation as the Bank of Canada prepares to make its first announcement concerning its key overnight lending rate in 2024 on Jan. 24. That rate — which currently sits at 5 per cent — sets the pace for mortgage and credit card rates.
Various voices including Premier David Eby have in the past argued against rising rates, noting that high housing prices actually feed inflation.
Perhaps nowhere is the relationship between housing affordability, or lack thereof, and consumer debt more apparent than in Vancouver CMA.
Surveys rank Metro Vancouver as one of the most expensive region in the world and consumer debt in Vancouver CMA has risen by more than 14 per cent since 2019, according to the Savvy New Canadians survey.
High housing prices in Vancouver CMA also appear to have an effect on surrounding communities. Abbotsford-Mission CMA has seen no small measure of population growth in between census periods with corresponding increases in housing costs. Not surprisingly, the region ranks second when it comes to new household debt with an increase of more than 22 per cent between 2019 and 2023.
But the survey also shows some regional variation when it comes to the sources of debt. Like their peers in Greater Vancouver and elsewhere in provincial population centres, residents of Greater Victoria face high housing prices. But B.C.’s capital region also tops the list for credit card, “reflecting consumer spending habits and (personal) financial behaviours,” it reads.
Victoria’s per-capita credit card debt was $12,874.00 just ahead of Vancouver’s per-capita card debt with $12,332.00.
“This city (Victoria) collaborates with fellow B.C. city Vancouver to form one of the most indebted cities per capita,” it reads.
Savvy New Canadians describes itself as personal finance platform.
@wolfgangdepner
wolfgang.depner@blackpress.ca
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