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Personal bankruptcies sticky in their decline

Personal bankruptcies sticky in their decline

Posted on: 1/23/2018 | Author: ATB Financial's Economics + Research Team

While many important economic indicators are pointing towards recovery, personal bankruptcies are lagging behind the trend.

According to the latest statistics, insolvencies in the province increased to 450 (+11.4 per cent) last October, up from 404 the month prior. Compared to 12 months earlier, when the number reached 440, the number of personal bankruptcies in Alberta is up 2.3 per cent.

Total consumer bankruptcies had been falling throughout 2017 until they picked up again in August and October. Part of this increase has to do with rising borrowing costs. In July and September, the Bank of Canada increased its key interest rate by 0.25 per cent. This made lending slightly more expensive for both consumers and businesses in subsequent months. Given the tender state of Alberta’s economy, it’s possible this increase has had a negative effect on the province’s borrowers.

The Bank of Canada recently increased its key lending rate by another 25 basis points in mid-January. So as we close out 2017 and enter 2018, there’s a chance bankruptcies could stay at elevated levels or move even higher than Alberta has been accustomed to since 2013.

Personal bankruptcies in Alberta

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