With credit growth grinding to a near halt and delinquency rates on the rise, it’s clear that Canadian borrowers are feeling the pinch of high interest rates and a slowing economy.
Yet, CIBC Deputy Chief Economist Ben Tal sees some silver linings amidst these challenges, which he says suggest we’re heading for more of a spending freeze rather than a large credit risk event.
First, let’s look at some of the concerning trends taking place in Canada’s credit market right now.
At the forefront is the dramatic slowdown in credit growth to levels not seen since the double-dip recession of the 1980s.
This slowdown is particularly pronounced in the mortgage sector, where the sensitivity to rate hikes has led to a dramatic decrease in new lending activity to what Tal says are recessionary levels.
“The speedy and aggressive slowing…
