Traditional “golden years” could be becoming rarer for older Canadian consumers as their debt loads rise, according to a new report.Canadian consumers of all ages continued to increase their debt burden, said Equifax Canada’s second-quarter report, released on Monday. Total debt rose by nearly $77 billion, or 6.1 per cent, compared with the same time last year.But consumers 65 and older had the greatest year-over-year increase, at 6.5 per cent, according to the credit-monitoring company.“The traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65,” said Henrietta Ross, CEO of Credit Counselling Services, in a statement.
“With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford.”She said seniors may be taking on debt to help their own parents or grown children, who may be struggling financially themselves.Despite efforts from regulators to tighten lending standards, debt has increased across all age groups, partially driven by a 7.4 per cent increase in outstanding mortgage debt since last year, the report states. Auto loan balances have also increased 8.6 per cent, according to the report.
An increased demand for credit outside of mortgages is positive for the economy in the short term, Cristian deRitis, Moody’s Analytics senior director of Consumer Credit Economics, said in a statement. But, he warned, that increased demand “could limit the ability of overextended consumers to react to any financial bumps in the road in the future.”“Stable home prices and improvements in the labour market should continue to support the market in the future, while the outlook for consumer credit remains positive,” deRitis said. “A sudden rise in interest rates or deterioration in fundamentals in key export markets are risks to this forecast, however.”While fears of another recession subside, consumers are continuing to accumulate high levels of debt, but with more fiscal responsibility, said Regina Malina, Equifax director of modelling and analytics.
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