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Borrowers in Canada got some welcome news today when the central bank announced it was holding its influential policy rate at 1.75 percent, suggesting interest on loans won’t be increasing for now — but one of Canada’s biggest banks has highlighted a potentially troubling trend.

Consumer insolvencies filed in November were up 5.2 percent from a year ago, according to the Office of the Superintendent of Bankruptcy. That annual increase follows an 8.9 percent year-over-year surge in October, the biggest leap in more than two years, reads a BMO Economics client note.

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The consumer insolvency measure includes personal bankruptcies as well as proposals, which are agreements overburdened borrowers negotiate with creditors which can include promises to pay back a percentage of what’s owed.

Although Priscilla Thiagamoorthy, the BMO economic analyst who wrote the note, mentions the volatility of monthly bankruptcy data, she points to the fact that the three-month average also reflects an increase in insolvencies.

Chart: BMO Economics

“This, along with recent declines in residential investment and car sales, suggests that households — the biggest segment of the economy — are under some pressure,” writes Thiagamoorthy.

Despite possible negative implications of an increasing share of Canadians undergoing bankruptcy proceedings, Thiagamoorthy notes an upside.

“The number of consumers claiming insolvencies could continue to trend higher, but the good news is the upswing is nowhere near the double-digit gains seen during the depths of the financial crisis,” she says.

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