Although there have been several reports of late indicating that debt in this country is on the

rise, Jim Flaherty does not believe that the answer lies in more mortgage and lending

restrictions.

It is a delicate balance- to put checks and balances in place to support responsible

borrowing and lending--- and allowing enough access to credit to keep the wheels of economic

growth turning.

One has to look no further than to our neighbours in the South to understand what can happen

when credit is too accessible- and then the economic backlash when the reins are pulled in with

great haste.

Both Stats Can and BMO released data this week that suggests that debt levels are still rising,

even in the face of strategized debt control- in the form of staggered changes to lending, as

introduced by Jim Flaherty.

Flaherty cites the health of the Real Estate market in this country as the main reason that there

is no immediate need to further impose lending restrictions.

In remarks during a speech delivered this week, he said, “We just took action in March and

activity is already starting to moderate.”

Stats Can said, “Mortgage debt advanced, partly reflecting relatively stable borrowing costs as

well as higher housing resale and renovation activities.” The concern, as been the impetus for

these lending changes- is not even so much about the increase in borrowing amount- but in

putting in perimeters for both responsible lending and borrowing. In short, it is about debt

management, as opposed to debt accumulation.

Stats Can reported this week that “the ratio of household credit market debt to personal

disposable income advanced to 147.3% in the first quarter, as growth in household credit

market debt (+1.3%) outpaced that of the personal disposable income (+0.7%). The

debt-service ratio also edged up in the first quarter, continuing a trend that started in the third

quarter of 2010. Somewhat weaker growth in personal disposable income (as a result of

temporary factors) and moderately higher borrowing, accounted for the rise in the debt-service

ratio in the first quarter.”