Canadians household debt increased to a new record in the final quarter of 2016 adding to concerns about what might happen in interest rates rise.
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Canadians personal debt: new (worrisome) record


It’s not looking good. In figures released this week, the personal debt of Canadians reached a new record last year. Statistics Canada, the federal statists gathering agency, reported that for every dollar of disposable income, Canadians owed, $1.67 in the fourth quarter of 2016

In fact the “debt-to-income” ratio was 167.3, which was up from the third quarter record of 166.8.

Total debt owed by Canadians reached $2.028.7 billion in the final quarter of 2016.  Most of that, about 65 percent, was mortgage debt,

Over $2-trillion in total debt

In addition to the Statistics Canada report, the consumer credit company Equifax said in its national consumer credit trends report said that while 46 percent of consumers were reducing their debt 37 percent were borrowing more.

Low interest rates have been blamed for rising household debt rates by encouraging people to borrow whether for mortgages or personal items.

The total debt at year’s end including mortgage debt, non-mortgage debt, and consumer credit was over $2-trillion.

There have been strong concerns raised about this debt level should interest rates rise or in the event of some economic shock resulting in substantial job losses.

The US Federal Reserve has just  raised its key interest rate from 0.75 percent to 1.0 percent, the second increase since December 2016.

Canada’s rate, for the moment, remains at 0.5 percent, although usually Canadian long term rates follow the US lead.

For the moment this means that interest rates for fixed-rate mortgages in Canada will likely increase.  Variable mortgage rates which are pegged to the  Bank of Canada policy, are not expected to increase for the moment as the central bank rate is not expected to rise in the near future.

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3 comments on “Canadians personal debt: new (worrisome) record
  1. Herry says:

    The more this country denies Canadians jobs, the more I steal everything I need to survive ! Welcome to the most corrupt country in the world. What, exactly, is the point of living ?

  2. Roxann Gifford says:

    The last two years have seen the same headlines.
    Bursting bubble..Canadians loaded with debt. Yet nothing
    is going to stop the spending frenzy. Ultra low interest
    rates and cheap money. Hard to believe the headlines these

  3. Rene Albert says:

    History has a habit of repeating itself, and am guessing Canadians will yet be surprised by another financial correction in the not too distant future…