Canadian consumers are known for their resilience, but that luck might be running out. Office of the Superintendent of Bankruptcy (OSB) filings show consumer insolvencies had one of the biggest June’s on record. A sudden surge of consumer insolvencies over the past year has the annual volume at the third-largest peak on record, and the first outside of recession. That brings up a lot of questions about where this number heads in the coming months as things cool.
Canadian Consumer Insolvencies Just Had The 4th Biggest June Ever
Canadian insolvency filings are climbing fast. The OSB received 11,096 consumer insolvency filings in June, an increase of 4.2% from last year. An unusually large volume of filings, making it the biggest June since 2016. It was the fourth-largest June on record, only behind 2009, 2010, and 2016.
Canadian Consumers Have An Unusually Big June
Canadian consumer insolvency filings with the OSB in the month of June.
Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.
The increase wasn’t sudden, but a gradually developing trend over the past few years. Consumers made 131,251 insolvency filings over the 12-month period ending in June. This represents a substantial 16.5% increase compared to the 12-months before. Just to put that number into context—this is an average of 359 consumers filing insolvency per day. Great time to be an insolvency trustee, not so much a consumer.
Canadian Consumer Insolvency Filings Surge Ahead of Recession
Annual Canadian consumer insolvencies.
Source: Office of the Superintendent of Bankruptcy (OSB); Better Dwelling.
Canadians haven’t sought this volume of annual debt relief since April 2020. That was supposed to be a very different time, making this all the more concerning. Aren’t households being told the economy is great, and soon to be the envy of our economic peers?
Back when this volume of insolvencies was last seen, the economy was in lockdown. This time around, the economy theoretically is doing so well that policymakers are bragging about Canada leading the G7 for growth. Lenders have also been told to work with mortgage borrowers to ensure they can handle their payments, leading to much longer amortizations than regulations typically allow. Even with state-mitigation factors, the 12-month trend is on track to hit the third-highest peak in well over 30 years
Something doesn’t quite make sense in this narrative. If this is a strong economy, the next recession won’t be pretty.
