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Winnipeg Free Press - PRINT EDITION

Manitobans reduce borrowing

-- Non-mortgage debt drops to $19,771 -- National average rises to $26,029

By: Murray McNeill

Posted: 06/1/2012 1:00 AM | Comments: 0

Manitobans broke rank with most other Canadians and began reigning in their borrowing in the first quarter of this year, according to new consumer-debt data.

TransUnion's latest quarterly review of non-mortgage debt in Canada shows Manitoba and Alberta were the only two provinces to see a drop in average consumer debt loads from the final quarter of last year to the first quarter of this year.

The average Manitoba consumer reduced non-mortgage debt by $188, or 0.9 per cent, to $19,771 from $19,959.

"That is a positive," said Thomas Higgins, TransUnion's vice-president of analytics, noting it's the first time in two years that Manitoba has seen a drop in consumer debt from one quarter to the next.

Through much of that period, it had been rising at a quarterly pace of between 0.5 per cent and one per cent, he said.

"So the message is getting through."

While Manitobans lightened their debt load in the first quarter of this year, Higgins said they were still carrying $188 more debt than a year earlier, when the average was $19,353.

Manitobans were still better off than the average Canadian, who was $432 deeper in debt than a year earlier.

The data also show while Manitobans and Albertans appear to be heeding recent Bank of Canada warnings about the need to reduce household debt -- Alberta saw its average consumer debt decline by 0.3 per cent to $33,000 -- the same can't be said for other provinces.

Canadians continued piling on debt in the first quarter of 2012, boosting the average debt load by $69 to $26,029 a person.

TransUnion attributed the growth to a spike in auto loans, which offset declines in credit card debt, lines of credit and instalment loans.

Car loans rose by more than $2,000, or 12.6 per cent, from the first quarter of 2011 to $18,212.

TransUnion didn't have a per-consumer breakdown of auto debt in Manitoba. But Higgins said total auto debt in the province accelerated by 6.1 per cent from the final quarter of last year in the first quarter of this year. That compared to a national increase of 6.5 per cent.

Higgins said even though consumer debt remains high, growth has slowed and in the last year has been skewed by the auto sector.

"This could be seen as a positive," he said. "Increases in auto loan debt generally mean more consumers are purchasing vehicles and are effectively managing their debt because they have strong enough credit to qualify for loans."

In comparable year-over-year periods ending with the fourth quarter of the year, consumer debt growth has slowed from about 10 per cent and higher in 2008 and 2009 to just over five per cent in 2010 and to one per cent in 2011.

The latest quarter's data show a slight acceleration, but only to 1.66 per cent annualized.

TransUnion also pointed out consumer delinquencies remain low, and auto delinquencies are the lowest in two years.

The Bank of Canada has warned for some time many Canadians are at risk of getting in over their heads in debt. But the main concern is mortgage and home-equity credit, which represents about 70 per cent of all household debt.

According to Statistics Canada, the ratio of household debt to annual disposable income has been at record highs of over 150 per cent for most the past year. Analysts note the debt ratio has continued to rise even though there have been signs of cooling in the housing market, in part because income growth has also eased.

Residents of British Columbia have the most non-mortgage debt at $37,433; Quebec averaged a relatively low $18,475.

murray.mcneill@freepress.mb.ca

-- with files from The Canadian Press

Republished from the Winnipeg Free Press print edition June 1, 2012 B3

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