Credit: A Mortgage for Life; A Review of Consumer Debt and Credit in Canada and the Impact of Increasing Shelter Costs on the Nature of Debt

Kathleen H. Brown, a financial consultant, was an associate professor of
Family Studies at the University of Guelph.

One suspects that the authors, feeling that indebtedness must be a problem for many Canadians, decided to marshal data to support this position. Their conclusion — that “there is good indication though, that indebtedness and insolvency is on the increase in Canada and will continue to be a wide-spread problem for those of all income levels” — has to be based on something other than the data presented in this book. As they admit, there is little available information about which households, and how many, have difficulty in servicing their debts.

The idea of compiling information on the incomes, assets, and debts of Canadian households was a useful one. The data they used, mostly national in scope and previously published in scattered documents, came from such reliable sources as the Consumer Income and Expenditure Division of Statistics Canada, Consumer and Commercial Affairs, Canada Mortgage and Housing Corporation, and reports on debtor profiles from credit counselling agencies.

Unfortunately, the lack of care in presenting and interpreting these statistics creates significant weakness in the book. The serious reader will occasionally find it necessary to consult the original sources of information to understand the tables, because of incomplete titles or labels. In the text, which purports to be a serious analysis of household debts, there are unsupported generalizations and conclusions that do not seem warranted.

Another annoyance is the lack of precision in the use of terms. The subtitle, “A Report on Consumer Debt,” leads one to expect that this book will be about consumer credit, which is defined in the literature as the debts of individuals or households, excluding business or mortgage debt. When the term “total debt” is used, mortgages are included. Although this distinction is scrupulously observed in their data sources, the authors failed to maintain this distinction clearly. The summary on the back cover announces that “families with incomes of $25,000 have debts of $21,575”; there is no indication that this includes mortgage debt, but it obviously does. Since mortgage debt is usually amortized over many years and may be seen by households as an alternative to rent, it can be misleading to combine large mortgage liabilities with short-term consumer debt.

This book can be a useful collection of information for the knowledgeable reader, but it has the potential to be misleading and confusing for the less sophisticated.