The percentage of households in Canada mired in extreme debt has almost doubled since 2000, and Canadians are pretty chill about it.
On Wednesday, the Bank of Canada said that 12 per cent of Canadian households — or as The Globe and Mail points out, one in eight — have a debt-to-income ratio that's more than 250 per cent. That's like making $40,000 a year and carrying $100,000 in debt — credit, mortgages, or loans, what have you.
And yet, a CIBC poll released Thursday found that only 16 per cent of Canadians are worried that they have too much debt.
That relaxed attitude is also coupled with optimism, as the poll — of 1,509 randomly selected Canadian adults — found that 71 per cent of those surveyed plan to axe their debt in 5 years or less. Thirty-six per cent think they can be debt-free in less than two years.
Christina Kramer, executive vice-president of retail and business banking at CIBC, said in a press release that Canadians have been dogged in their pursuit of eliminating their debt.
"Annual research on financial priorities for Canadians shows that debt repayment has been their number one priority for four years running, and we are now seeing some results from those good intentions," Kramer said.
The reason for these "good intentions," CIBC said in the release, is that Canadians are taking advantage of lower interest rates to smack down their debt.
Although Canadians are "being lured by low borrowing rates," wrote Benjamin Tal in an October CIBC report, "they in fact pay back principal at a rate much faster than officially estimated by the Bank of Canada."
"Despite a mediocre labour market and an unemployment rate that is still too high for the liking of the Bank of Canada, debt service performance in Canada has almost never been better," wrote Tal, deputy chief economist of CIBC World Markets Inc.
The Bank of Canada is slightly less optimistic, saying that the situation for the 12 per cent with massive debt will turn worse if interest rates rise.
Even Tal, in a Dec. 2, report, wrote that "consumer credit is accelerating" and that “we might see bankruptcies rising alongside interest rates.”
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