Interest rates stay low, household debt hits record $1.5 trillion

The TD Bank says Canadians can expect borrowing costs to remain near record lows for the rest of the year.

The TD Bank says Canadians can expect borrowing costs to remain near record lows for the rest of the year.

That’s because the pace of the economic recovery is expected to slow sharply in Canada, the United States and much of the world.

As such, the Bank of Canada will likely refrain from raising its key interest rates until 2012, TD says.

The central bank has had its policy rate set at one per cent since September. The rate was set at all-time low of 0.25 per cent through much of the recession, to stimulate borrowing and spending, until a series of rate hikes began last summer.

The still-low rates have been a double-edged sword for Canadians who are already piling up debt at record levels, according to the Certified General Accountants Association of Canada.

The association says Canadian household debt has reached a record $1.5 trillion, and calculates that more than half of indebted Canadians are borrowing just to afford day-to-day living expenses such as food, housing and transportation.

Low interest rates will make it easier of Canadians to keep borrowing, setting them up for a fall further down the road.

Debt is partly contributing to a slowdown in Canadian growth, says the TD Bank, because households are too tapped out to spend and stimulate the economy.

The bank says Canada’s economy is believed to have already slowed to 1.3 per cent growth during this current quarter that ends at the end of the month, one third the pace of the first quarter’s 3.9 per cent gain.

The rest of the year will see growth crawl along between two and 2.5 per cent, the bank says.

As the recovery moderates, so will job growth. The bank says it expects the unemployment rate in Canada will remain above seven per cent throughout its forecast period to the end of 2013.

With little help from consumers, Canada will need to depend on exports and business investment to fuel growth.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Bloc Québécois MP Sebastien Lemire rises during question period in the House of Commons on Parliament Hill in Ottawa on Friday, March 12, 2021. A Bloc Québécois MP has apologized for taking a screen shot of a Liberal MP who inadvertently appeared nude during virtual proceedings in the House of Commons last week. THE CANADIAN PRESS/Sean Kilpatrick
Bloc Québécois MP apologizes for taking nude photo of Liberal MP William Amos

‘I have no idea how that photo made its way into the media’

The Business Council of Alberta says the federal budget is nearly silent on Canada’s energy sector. (File photo by The Canadian Press)
Business Council of Alberta mostly disappointed in federal budget

Investments in childcare and early learning commended

.
3-hour paid leave for Albertans to get vaccinated in the works

The UCP government intends to introduce legislation that will ensure working Albertans… Continue reading

Alberta completed 18,412 COVID-19 tests, as reported on Wednesday, for a test positivity rate of 9.5 per cent. (NIAID-RML via AP)
Highest daily count of 2021 so far: Alberta reports 1,699 COVID-19 cases

Variants now make up 59 per cent of Alberta’s active cases

Several cases of COVID-19 were reported among employees of stores at Bower Place Mall. (Photo by LANA MICHELIN/Advocate staff).
COVID-19 cases reported at Bower Place mall stores

AHS said five complaints were investigated since March, and required changes made

Westerner Park’s Exhibition Hall was used as a vaccination clinic on Wednesday. A steady stream of people came to get their COVID-19 shots either by appointment or as walk-ins. Photo by PAUL COWLEY/Advocate staff
No long lineups at walk-in vaccination site in Red Deer

A steady stream of people walked into Westerner Park on Wednesday to… Continue reading

Linda Tomlinson
Gardening: Leave the lawn until the soil is dry

Spring is arriving, Alberta style with warm days, cold days and snow.… Continue reading

Silent protests were held recently in response to Red Deer Public Schools’ decision to reject a Pride Week in favour of a Diversity Week. Some former employees at Red Deer Public are saying the decision is misguided. (File photo by Advocate staff)
Letter: School board silencing Pride Week concern

While it has been our practice to not comment on matters arising… Continue reading

Anderson scores twice as Canadiens down Oilers 4-3

Anderson scores twice as Canadiens down Oilers 4-3

New York Liberty guard Kia Nurse (5) shoots next to Indiana Fever's Kamiah Smalls during the first half of a WNBA basketball game Thursday, Sept. 10, 2020, in Bradenton, Fla. Nurse isn't just one of Canada's finest female basketball players, she's becoming a popular voice of the game as well. THE CANADIAN PRESS/AP -Phelan M. Ebenhack
Canadian basketball star Nurse is carving out space in sports broadcasting at just 25

Canadian basketball star Nurse is carving out space in sports broadcasting at just 25

The D.C. Defenders, right, line up against the Seattle Dragons for the opening kickoff of the opening football game of the XFL season, in Washington, Saturday, Feb. 8, 2020. Despite heated social media discussion in Canada, talks between the CFL and XFL haven't addressed what rules could be implemented in a potential partnership. THE CANADIAN PRESS/AP-Stephen Whyno
CFL commissioner Ambrosie says talks with XFL have centred around business, not rules

CFL commissioner Ambrosie says talks with XFL have centred around business, not rules

Former B.C. university rowing coach ‘deeply sorry’ after complaints

Former B.C. university rowing coach ‘deeply sorry’ after complaints

Canada's Brianne Jenner (19) and Russia's Anna Shibanova (70) battle for position in front of Russia goaltender Alexandrova Nadezhda (31) during third period IIHF Ice Hockey Women's World Championship preliminary round action in Plymouth, Mich., on Monday, April 3, 2017. The women's world hockey championship in Nova Scotia has been cancelled a second time because of COVID-19. THE CANADIAN PRESS/Jason Kryk
Women’s world hockey championship in Nova Scotia cancelled again

Women’s world hockey championship in Nova Scotia cancelled again

Canada's Meagan Duhamel and Eric Radford compete in the pairs figure skating free program at the Pyeonchang Winter Olympics Thursday, February 15, 2018 in Gangneung, South Korea. THE CANADIAN PRESS/Paul Chiasson
“Once in a lifetime opportunity” – Radford, James are Canada’s newest pairs team

“Once in a lifetime opportunity” - Radford, James are Canada’s newest pairs team

Most Read