Household borrowing fell in 1st quarter, StatsCan says

Household borrowing fell to $65 billion in the first quarter of 2009.(Jonathan Hayward/Canadian Press)

As the recession continues, Canadians are becoming a lot more reluctant to borrow money, new Statistics Canada data suggests.

Household demand for funds was $65 billion in the first quarter of 2009, a substantial drop from the $91 billion borrowed in the previous quarter.

The total demand for household borrowing had held steady at more than $100 billion for nine straight quarters before dropping below that figure for the last two.

Lower personal expenditures on goods and services, particularly purchases of motor vehicles and household furnishings, contributed to reduced household borrowing in the form of consumer credit and bank loans, the federal agency said in a release.

Lending institutions had been lowering interest rates during the period in an attempt to spur Canadians to borrow more. Despite the decrease in mortgage rates, net new mortgage borrowing also contracted during the first three months of 2009.

Banks have since begun to set rates higher. On June 1, Bank of Montreal raised its five-year fixed rate by .2 percentage points to 5.45 per cent.

Royal Bank had previously done the same.