He stated that 66 per cent of increased debt since 1990 until 2016 is for mortgages. The other 34 per cent is for consumer loans and credit. The 66 per cent noted now equals 170 per cent of household disposable income.
Mr. Di Matteo shows how household net worth has increased substantially and is positive. He states further that interest rate increases and job losses are the greatest risks to managing household debt. Well put.
I believe that an analysis of bankruptcies should have been part of his review. In Canada in 1987, (pop. of 26.5 million), there were 33,000 insolvencies. In 2012, there were 124,000 insolvencies with a pop. 33.5 million. That’s a 26 per cent population increase and a 275 per cent increase in insolvencies. The average debt per consumer insolvency in Canada increased by 600 per cent. In 2011, P.E.I. had 620 bankruptcies and proposals. In 2014, there were 72. That’s a 16 per cent rise.
If you sell a house in a larger market you can realize a large profit only if you move away from that market. Sell a house in Charlottetown for the average ($180,000) you have to hope you don’t live much more than 12 years beyond that sale date in a rental equivalent. The reason for many bankruptcies is the fact that an important course in simple household budgeting is not taught to students. I don’t believe concerns over household debt are overblown at all.
David C. Campbell,