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At first glance, the latest insolvency data appear to show that rising interest rates are taking a toll on Canadians’ finances. But a closer look reveals an overall declining trend in insolvencies.

The Office of the Superintendent of Bankruptcy Canada says the number of consumer insolvencies in November rose by 5.2% from a year ago, and business insolvencies increased by 8.9%.

The Bank of Canada raised its key lending rate five times since the middle of 2017, potentially explaining the year-over-year increase.

However, important to assessing the data is knowing that insolvencies comprise both bankruptcies and proposals. The latter are offers to creditors to settle debts under conditions other than the existing terms, and don’t necessarily turn into bankruptcies, says Derek Holt, vice-president and head of capital markets economics at Scotiabank, in a report.

Breaking apart the two categories indicates that “consumer bankruptcies remain very well behaved,” Holt says.

For example, for the 12-month period ending Nov. 30, the total number of bankruptcies and proposals grew by 2%, with consumer bankruptcies falling by 5% and proposals increasing by 8.4%.

Offering more detail, the Scotiabank report graphs data confirming that consumer bankruptcies have been on an overall downward trend since 2010. And proposals have been on an upward one, which Holt doesn’t find concerning, considering new mortgage stress-testing rules introduced last year.

“A rise in proposals was expected post OSFI’s B20 stress testing changes, as renewals would be more difficult in the tails of indebtedness,” Holt says in the report. “It is misleading to attribute the rise in proposals as just a function of higher rates.”

In fact, he says the increase in proposals is “a reflection of one of the great relative strengths of the Canadian banking system versus, say, the U.S. system.” Canada’s system is more flexible, and proposals tend to get worked out, he says.

For business insolvencies, despite November’s year-over-year increase of nearly 9%, “business bankruptcies are also very well behaved toward cycle lows, but this fact tends not to make headlines,” Holt says. Business proposals increased in November, but even that is just one month in an overall declining trend, he says.

Business insolvencies for the 12-month period ending Nov. 30, 2018 decreased by 0.6% compared with the 12-month period a year prior.

For full details, read the Scotiabank report.