Skip to main content

Bankruptcies keep falling

Personal bankruptcies have fallen to the lowest level in seven years, cushioned by a strong labour market, Canadian Imperial Bank of Commerce said Monday.

Bankruptcies, on average over the past three months, fell 7.6 per cent from last year but – like most economic reports of late – the headline number masked regional discrepancies. In Alberta, they tumbled 17.5 per cent, while bankruptcies in Quebec and Atlantic Canada rose 3.6 per cent and 1.8 per cent, respectively, CIBC said in its bankruptcy report.

At the same time, Ontario bankruptcies are falling as strength in Ottawa, Toronto and Kitchener offsets higher rates in Sudbury and Windsor, cities more vulnerable to the strong Canadian dollar.

“Looking at development in the pipelines, it appears that there is little risk of any significant deterioration in the bankruptcy situation in the near future,” CIBC economist Benjamin Tal said in the report.

In one barometer that shows fewer people are likely going belly up, the delinquency rate in credit cards has stabilized at about 4.6 per cent — lower than its long-term average. Mortgage arrears, meantime, remain well below their long-term average and are “unlikely to rise strongly in the near future,” the report said.

CIBC forecasts little change in the number of bankruptcies this year and a 3 per cent-5 per cent increase next year as economic activity weakens.

Business bankruptcies, meantime, have fallen more than 18 per cent, on average over the past three months, from last year — a rate not seen since late 2002.

The largest decline in business bankruptcies was in Alberta where the number of bankruptcy filings plunged by almost 40 per cent during the year ending April.

Ontario was the only province that saw an increase in the number of business bankruptcies in the period, weighed down by difficulties in the manufacturing sector.

The number of business bankruptcies is expected to fall by 7 or 8 per cent this year be little changed in 2007, CIBC said.
“At the same time, we expect the regional divergence to widen with bankruptcies in the manufacturing sector in Ontario and Quebec continuing to rise, reflecting the impact of a strong dollar and some softening in demand from south of the border.”

Comments

Popular posts from this blog

Home Equity Loan or Home Equity Line of Credit?

Home equity loans and home equity lines of credit continue to grow in popularity. According to the Consumer Bankers Association, during 2003 combined home equity line and loan portfolios grew 29%, following a torrid 31% growth rate in 2002. With so many people deciding to cash in on their home's equity value, it seems sensible to review the factors that should be weighed in choosing between out a home equity loan (HEL) or a home equity line of credit (HELOC). In this article we outline three principal factors to weigh to make the decision as objective and rational as possible. But first, definitions: A home equity loan (HEL) is very similar to a regular residential mortgage except that it typically has a shorter term and is in a second (or junior) position behind the first mortgage on the property - if there is a first mortgage. With a HEL, you receive a lump sum of money at closing and agree to repay it according to a fixed amortization schedule (usually 5, 10 or 15 years). Much l

Canada's recession resilience (article below)

There will be lots of information coming out today. Bank of Canada governor Mark Carney will be explaining (maybe vaguely) the reasons for the BoC rate drop and expectations we should have for the future, quantitative easing (printing money), and how this will all affect the Canadian economy. Here is an article from the Financial Post that expands on this. Keep an eye on this as it will affect bond rates/yields which could affect mortgage rates. Terence Corcoran: Quantitative schemes at the Bank of Canada Posted: April 22, 2009, 9:17 PM by Ron Nurwisah Terence Corcoran , central banks On Thursday we will learn what the Bank of Canada will do next to stimulate the economy, how it will apply the now famous “quantitative easing” phase of its ongoing effort.The bank is already giving away money, setting an overnight rate of 0.25% — “virtually zero,” as former governor John Crow says in his commentary . At the chartered banks, astute mortgage borrowers can almost lock in less than 2% for