Do Canadians Borrow For Wealth ?

Do Canadians borrow for wealth? The Bank of Canada (and Stats Canada) also put out a withering barrage of monthly information that I don’t even try to keep up with. On occasion, I am motivated to go over and check things out. This month, I found some fascinating information in the Bank of Canada Banking and Financial Statistics in June 2015. Be warned this is a PDF file with over 100 pages of tables and data. Still, the one table that caught my eye was Table C7: Chartered banks: Quarterly classification of non-mortgage loans  (I have included a somewhat transcribed version at the end of this article).

As with all data, many different lemmas, theories and ideas can be implied or inferred, but I will attempt to make two simple comparisons:

• Borrowed money for investing compared to Car Rentals
• Investing vs. Funds held on Credit Cards

Here are two harder-to-read graphs that show the trends for the past ten years (including Q1 in 2015), the big table of the actual data is at the end of the article (as well).

If you can make out the colours and such, you will see the massive increase in Credit Card and Vehicle Debt over the ten years and the tiny increase in loans to borrow for RRSPs and General investing. I am not a big fan of borrowing to build wealth, and it seems most Canadians don’t think of that, but we do want to borrow to buy “things” like Vehicles, Mobile Homes and “stuff” on our Credit Cards.

The numbers are telling:

• Private Passenger vehicle loans in 2005 were about $15,577,000,000 but now they are $72,961,000,000 almost quintupled over 10 years (2 complete doublings)
• For Credit Cards $38,922,000,000 in 2005 but by 2010 $75,738,000,000 almost 1 complete doubling in 10 years.

What does this mean? Canadians love our cars and stuff and are wary of borrowing money to invest? (yes an oversimplification, but the numbers seem to point in that direction.

 The Big Table from the Bank of Canada

I do suggest having a look at this data online as well:

	To Purchase Securities		Consumer Spending
	Tax Sheltered plans	Marketable stocks and bonds	Private Passenger Vehicles	Mobile Homes	Renovations of residential properties	Other	Subtotal	Credit Cards	Total
	V33760	V37759	V37755	V37756	V37757	V37758	V37754	V37753	V37752	V37751
2005	1,262	3,476	15,577	460	2,824	146,231	165,092	38,922	204,014	208,752
2006	1,300	3,714	16,218	422	3,178	158,824	178,642	41,998	220,640	225,654
2007	1,183	3,876	17,311	388	3,721	178,768	200,188	50,638	250,826	255,885
2008	1,099	3,220	23,002	370	4,903	207,126	235,401	53,703	289,103	293,423
2009	1,306	3,531	33,870	372	3,848	235,530	273,620	57,792	331,412	336,249
2010	1,326	3,789	42,095	200	3,618	247,113	293,027	61,325	354,352	359,468
2011	1,242	3,515	49,347	188	3,328	274,229	327,091	81,811	408,902	413,658
2012	1,487	3,521	54,992	242	3,774	285,252	344,260	78,969	423,229	428,237
2013	1,345	3,067	63,862	258	2,569	291,899	358,589	76,886	435,475	439,886
2014	1,070	3,628	71,981	829	3,155	291,750	367,715	79,046	446,761	451,459
2015 QI	1,573	3,713	72,961	814	3,114	291,887	368,775	75,738	444,513	449,799