Household debt hits record high in Canada
Posted December 13, 2012 7:28 am.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – It has been called the biggest risk to our economy; household debt has hit a new record high across the country.
Statistics Canada reports we were at an all-time high for household debt compared to disposable income, despite warnings that borrowing costs will not remain cheap forever.
Stats Can says the ratio of credit-market debt, including mortgages, to disposable income hit 165 per cent last quarter. That means is if you have $100 in your pocket, you owe $165.
Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have cautioned that if we don’t keep debt loads affordable, there’s a risk Canadians will be crushed by them when interest rates start to go up. The way things look right now, the central bank is expected to start increasing rates in the second half of next year.
But there are a few bright spots: the growth in household debt has slowed to a pace not seen since 2002, household net worth is up one per cent across the country, and disposable income is up slightly.
Some economists point out that as mortgage rules have tightened and the housing market has cooled, we are at least starting to rack up less debt than we used to.
