Data from the Office of the Superintendent of Bankruptcy revealed that 2019 saw the second-highest number of annual consumer insolvency filings ever in Canada.
Last year, a total of 137,178 Canadians filed for insolvency, representing a 9.5% year-over-year upward movement. This was the largest annual gain since 2009, and a worrying indicator that more and more consumers are finding debt increasingly unmanageable.
Ontario saw the greatest regional growth in consumer insolvency filings at 15.4%, followed by Newfoundland and Labrador at 15% and Alberta at 14.6%. British Columbia saw an 10.34% annual increase, while Quebec had a more moderate 2.7% uptick.
“The increase in insolvencies is still partly the result of the interest rate increases that occurred during 2016 to 2018. We know that when the interest rate increases, the insolvency rate increases but there is a two to three-year lag,” according to André Bolduc, board member of the Canadian Association of Insolvency and Restructuring Professionals.
Bolduc warned that incidences of insolvency will continue increasing this year.
“One of the reasons is that a lot of people struggle with debt for years before they seek financial help. That’s partly because many households bury their heads in the sand about the scale of their debts until something tips them over the edge – like a mortgage renewal or an unexpected expense.”
The phenomenon will become especially apparent among Canada’s millennials, if the results of a new poll by KPMG are any indication.
The global accountancy firm found that while 72% of those surveyed are aiming for home ownership, fully 46% of the respondents indicated a belief that their chances of owning a home are nothing more than flights of fancy.
Moreover, 46% of those who do own homes had to depend on parental finances to fulfill their down payment requirements.
“The combination of rising house prices, high levels of personal debt, and annual incomes that are just a fraction of the cost of buying a home compared with their parents’ generation, is pushing the dream of home ownership out of reach for many millennials,” KPMG national leader for human and social services Martin Joyce said, as quoted by the Financial Post.