On an annual basis, the largest growth in insolvencies last October were recorded in Ontario (14.4%) and British Columbia (9.3%), outstripping the national average of 8.9%.
Data from the Office of the Superintendent of Bankruptcy showed that consumers nationwide filed 13,200 bankruptcies in October, which was 13% higher year-over-year. This monthly level was the highest reading since September 2009, which saw 15,465 filings.
Quebec had a relatively modest 1.7% annual increase in insolvencies. Only Nunavut, Yukon, and the Northwest Territories posted decreases.
One major driver of the phenomenon was the prolonged period of low mortgage rates. Indeed, a significant proportion of Canadian consumer debt is due to housing, Dalhousie University economics professor Lars Osberg stated.
“We’ve had uneven income growth in Canada,” Osberg told CTV News in an interview. “The system is dependent on people in the middle spending more than their income. Those debts can only get so high.
“The unbalanced nature creates cyclical instability problems.”
According to a recent economist survey by Bloomberg, mounting insolvencies might be a prelude to intensified pressure upon the national housing market, and the financial system as a whole.
The trend is particularly baffling, as it is taking place amid a generally positive economic outlook, with record-low unemployment levels and minimal mortgage arrears (0.23% as of the end of July).
“Normally there’s a story you can tell, like there’s some underlying weakness that shows up with a bit of a lag in personal bankruptcies and insolvencies,” Stephen Gordon of the Université Laval told Bloomberg. “It’s just hard to see that now. It’s perplexing.”