June 30, 2012
VANCOUVER, BC, Jun 30, 2012/ Troy Media/ – Consumer insolvencies, which include the combined number of individuals filing for either bankruptcy, or offering to settle debts with creditors under conditions other than the existing terms, reached a seasonally-adjusted 1,080 filings in April, the highest level since late 2010.
This marked a 13 per cent gain from March and pushed year-to-date filings above same-period in 2011 by 3 per cent. While one-month of weak data does not make a trend, the general decline in B.C. consumer insolvencies observed since late 2010 has flattened in recent quarters at elevated levels.
First quarter consumer insolvencies were up 2 per cent from the fourth quarter to reach a seasonally-adjusted 2,970 fi lings, but largely unchanged from the Q1 2011. Regional consumer insolvencies fell the most in the Thompson-Okanagan on a year-over-year basis, but were offset by gains in the Lower Mainland-Southwest and Northern regions.
Total consumer insolvencies remained above previous highs observed in the early 2000s, but were slightly below when adjusted for growth in the working-age population. The elevated flow suggests that a significant number of B.C. households are still financially strained, but conditions are steady.
Given that insolvencies are a lagging indicator of the economy, recent employment growth, particularly in the full-time sector, and low interest rate environment is expected to pare insolvencies this year, but declines will be modest.
The lukewarm state of consumer finances in B.C. is further supported by the proportion of mortgages that are three or more months in arrears. The metric which correlates well with insolvency trends, increased in both March and April to reach 0.47 per cent on a seasonally-adjusted basis.
While low in absolute terms, the increase followed five months of declines and levels were elevated relative to rates observed over the past decade. In addition, the recent uptick and generally weak pace of decline in the arrears rate compares unfavourably with the steeper pace of decline observed elsewhere in Canada.
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