ACCORDING to BMO’s Annual Debt Report released Tuesday, the average household debt in Canada has risen from $72,045 last year to $76,140 in 2014, with Alberta leading the way. The report also details how the mix of debt – mortgages, credit cards and student loans – for households in the provinces has changed year over year.
The report, conducted by Pollara, revealed that household debt has increased in each region across Canada, except for the Prairies and Ontario. Alberta remains the province with the highest household debt, $48,698 above the national average. Alberta and BC are above the national average, while the other provinces are below.
Average Household Debt
2013 / 2014 / % change
* British Columbia: $79,089 / $99,834 / 26.2
* Alberta: $89,026 / $124,838 / 40.2
* Manitoba / Saskatchewan: $82,100 / $68,437 / -16.6
* Ontario: $76,970 / $67,507 / -12.3
* Quebec: $56,860 / $59,805 / 5.2
* Atlantic Canada: $47,237 / $64,120 / 35.7
* National average: $72,045 / $76,140 / 5.7
Other noticeable regional differences include:
* Albertans have nearly twice the average household debt than Ontarians ($124,838 vs. $67,507, respectively).
* Atlantic Canadians took on more than $16,000 of household debt this year compared to 2013.
* British Columbians also took on more debt – $20,745 more this year than last.
* Those in the Prairies reduced their debt by $13,000 from last year.
Sal Guatieri, Senior Economist, BMO Capital Markets, noted that the booming economy of Alberta, particularly Calgary, has made the province an outlier compared to other regions. “Part of the reason household debt in Alberta is so much higher than in other provinces may be due to rapidly rising house prices, which have caused home buyers to take on larger mortgages.”
The BMO Debt Report also revealed the type of debt Canadians have in 2014 compared to last year:
* Four in ten (43 per cent) Canadians hold mortgage debt, an increase of 13 per cent year-over-year.
* More than half of Canadians have a credit card balance, but the number of households has dropped from 56 per cent to 52 per cent this year.
* Student loans have remained stable, with 15 per cent of Canadian households reporting this type of debt
The rising share of households with a mortgage is partly driven by the active participation of first-time buyers, mainly young Canadians, noted Guatieri.
Types of debt
Credit cards / Mortgages / Student loans (%)
* British Columbia: 58 / 44 / 10
* Alberta: 50 / 53 / 17
* Manitoba / Saskatchewan: 45 / 38 / 3
* Ontario: 54 / 40 / 19
* Quebec: 46 / 46 / 11
* Atlantic Canada: 60 / 31 / 20
* National average: 52 / 43 / 15
“It is encouraging to see Canadians are paying down credit card debt, which costs more – especially compared to today’s low mortgage rates,” noted Tony Tintinalli, Regional Vice President, BMO Bank of Montreal. Tintinalli encouraged Canadians to speak with a financial planner to set realistic financial goals and a budget, and put a plan in place to pay down their debt aggressively, whether by opting for a shorter amortization for those with mortgages, or by choosing a credit card with a lower monthly interest rate.