Canadians have pushed their debt levels to an eight-year high in a climate of ultralow interest rates, according to a new report that suggests consumers are unmoved by repeated warnings that rates will inevitably rise.
The report of Canadian debt trends by credit agency TransUnion found the average consumer's non-mortgage debt load rose another $192 to $26,221 in the second quarter - the highest average debt per person the company has seen since it began tracking the variable in 2004.
It was the second consecutive quarter in which debt accelerated following more than a year of quarterly declines.
"Since the recession, we've seen the growth rate come down and then for five quarters there it really wasn't going very far," said Thomas Higgins, TransUnion's vice-president of analytics and decision services.
"In the last two quarters, we've seen things starting to slowly ramp up in the other direction and start increasing."
Debt growth was 2.41 per cent higher than in the second quarter of 2011, though the pace slowed slightly from that quarter's gain of 2.99 per cent.
However, during the second-quarter of 2011, the growth rate was on its way down from more than 10 per cent year-over-year prior to the recession.
Credit growth bottomed out in the fourth-quarter of 2011, but has risen again. Consumers have taken advantage of ultra low interest rates since the 2008-9 recession to heap on low-cost debt.
The Bank of Canada says household debt is the No. 1 risk to the economy.
For a while, it appeared Canadians were heeding the warnings of officials and economists that debt loads are too high. But Higgins said he believes Canadians are ramping up spending as they become more confident that interest rates will remain low.
"We still continue to do what we're doing until we see the spike in unemployment because some economic shock hits, or all of a sudden the interest rates go up 50 or 100 basis points and my next line of credit statement shows I'm paying another $100 a month in interest," Higgins said.
Jeffrey Schwartz, of Consolidated Credit Counseling Services of Canada, said: "They're making these decisions based on impulse and they find themselves digging further into a hole rather than putting money aside or even paying off debt."