Yahoo Finance Consumer credit growth slowest since 2001
It appears constant jawboning by Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty is working when it comes to the pace of credit growth as Canada's consumers continue to back off from borrowing, according to an analysis by the Royal Bank of Canada.
Overall household debt was $1.67-trillion, up 4.5 per cent above its year-ago level in February -- down from 4.7 per cent in January -- to notch the slowest year-over-year rate of increase since June 2001, said David Onyett-Jeffries, an economist at RBC.
Total Canadian mortgage debt was at $1.16-trillion in February, up 5.4 per cent compared with the same period last year to log the smallest year-on-year accumulation since November 2001.
"The sustained moderation in household debt growth continues to be welcomed with open arms by policymakers as it helps to stem concerns that Canadian consumers are overextending themselves and exposing the financial system to heightened risks," Onyett-Jeffries wrote in his analysis.
But the offshoot to consumers scaling back their demand for credit is a more moderate contribution to overall growth from the household sector. The pullback will likely be most evident in the expected slowing in housing market activity over the coming year.
Business credit growth on the rise
Meanwhile, corporate sector financing is on the rise, said RBC. The pickup in business financing growth against the backdrop of low interest rates and healthy corporate finances is in line with RBC's view that Canadian firms will continue to grease the economic engine through capital investment this year.
Total business financing expanded by $1.42 trillion, up 7.9 per cent in the twelve months ended February, and up from 7.8 per cent in January. This is well above the long-term average 5.3 per cent and the highest rate of business financing growth in five years.
