Canadians are loaded with debt

Canadian mortgage balances are getting swole-r than a gym bro getting ready for spring break.

Driving the news: TD, BMO, and CIBC disclosed that rising interest rates have caused 20% of their residential mortgage borrowers to see their balances grow so monthly payments no longer cover their interest owed, per The Globe and Mail.  

• Amortization periods are stretching like taffy—in some cases, even going as high as 90 years—as homeowners bargain for more time to pay off their debt.
  
  
• RBC, Canada’s largest mortgage lender, said 43% of its residential mortgages had an amortization period longer than the industry standard of 25 years as of July.

Mortgage struggles are just one sign that something is amiss with the chequebooks of the nation. 

• Canada’s Big Six banks have now all set aside more money to protect against feared loan defaults, as they were voluntold by the federal banking regulator.

• A TransUnion report found that household debt hit $2.3 trillion last quarter, up 4.2% year over year and driven largely by *you guessed it* mortgage debts.
  

Why it matters: These indicators point to more Canadians falling deeper into debt. More debt equals less purchasing power and a higher risk of insolvencies, which means not only cutting down Netflix subscriptions but knock-on effects that could drag down the economy.

• And effects are already being felt. A TD report predicted that consumer spending could soon slow to a crawl as debt servicing increased. 
  
  
• The Canadian Association of Insolvency and Restructuring Professionals found that personal insolvencies increased by 23.5% year over year last quarter.
  

Bottom line: Canada is already one of the world’s most indebted nations, and saw purchasing power drop by its most in a decade just last year, per Oxfam. Super chill.—QH