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Threat to new originations growth, according to report

There’s good news and bad news for brokers worried about rising household debt and its impact on mortgage originations.

Equifax says debt for those with a credit file, which includes most adults, rose two per cent in the second quarter of 2015 after rising 2.7 per cent in the first quarter.

The good news is that doesn’t factor in mortgage debt.

But while brokers have traditionally pointed to unsecured debt as the chief culprit, there’s another form of secured debt that is raising concerns and eyebrows.

Equifax says Canadians are adding to debt to buy new cars, with auto loans increasing by 3.9 per cent from the same period last year.

That adds to concerns about the impact of an automobile buying spree that started in 2010 and continues to build despite stagnant wage growth across much of the country.

Those car loans have, in some cases, stood in the way of broker clients qualify for mortgages even despite their otherwise stellar credit.

It’s one reason brokers are becoming more proactive in trying to ward clients off of making those types of big-ticket purchases in the build up to home buying.

In hard-hit Alberta, the problem may, in fact, be the worst.

With an average of $27,313 in consumer debt for every person with a credit file, household debt in the oil capital of Canada topped the provincial charts..

Yet Equifax says the average debt load in that province dropped by 0.1 per cent from the second quarter of 2014.

Resource By:-http://www.mortgagebrokernews.ca/news/threat-to-new-originations-growth-according-to-report-196354.aspx

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