Consumer debt loads grow at fastest pace in 2 years

Canadian debt loads grew at their fastest pace in two years during the summer, according to a report released Wednesday — an alarming rate given that officials continue to warn consumers that household spending is out of control.

Credit reporting agency TransUnion's latest quarterly analysis of Canadian credit trends found average consumer non-mortgage debt jumped 4.6 per cent year-over-year in the third quarter to an average of $26,768.

Measured on a quarterly basis, debt grew 2.1 per cent in the summer from the second quarter of this year.

Debt increasing 400% faster
"It's almost been two years and it's the largest year-over-year increase we've had and I think it's the largest quarterly increase we've had during that time period as well," said Thomas Higgins, TransUnion's vice-president of analytics and decision services.

Higgins said the increase stands in stark contrast to encouraging signs from relatively stagnant debt growth in the prior three quarters.

He also points out that in the past five years, debt loads have increased 400 per cent more than the rate of inflation — with inflation as measured by the Consumer Price Index up nine per cent and consumer debt jumping more than 37 per cent.

"Debt's outpacing us and continues to outpace us, so at some point in time there's going to be a reconciliation," Higgins said.

"Hopefully it's not drastic and hopefully it doesn't hit everybody, but there's going to be a correction somehow along the way."

- The Canadian Press