Mortgages push household debt to new levels?

While the uptick in mortgages is good news for the industry, the levels of debt could be a future concern once mortgage rates climb upwards.

The latest bank data shows that total Canadian outstanding household credit rose to $1.869 trillion in August, up an annualized pace of 5.9% from July.

Compared to the previous year, household debts were up 5% – the highest year -over-year increase since October 2012. Residential mortgage debt shot up 7.5% annualized in August, raising the three-month rate to 7%.

However, consumer debt (credit cards, car loans, personal Lines of Credit) only increased a modest 2% during the same period.

During the first half of 2015, Canadians were making an effort to reduce their debt, according to a Manulife Bank of Canada debt survey. The Spring survey revealed that four in ten homeowners made an extra payment on their mortgage in the last 12 months, with 56% of homeowners reducing their debt.

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