The amount Canadians owe compared to their disposable income rose to an all-time record last quarter, the government agency Statistics Canada reported Friday (December 13). The level of household credit market debt to disposable income increased to 163.7 per cent in the third quarter from 163.1 per cent in the second quarter.
That means Canadians owe nearly $1.64 for every $1 in disposable income they earn in a year.
Household sector leverage indicators
(Graph: Statistics Canada)
According to CBC News “Policymakers are fixated on the debt ratio in part because it was at above 160 per cent that households in the United States and Britain ran into trouble about five years ago, contributing to defaults and the financial crisis that triggered the 2008-09 recession. Debt loads can be influenced by seasonal factors, and although the headline figure is higher, the rate of growth in that ratio was the smallest in 12 years.”
More information:
CBC News – Personal debt ratio hits record high of 163.7% – here
Financial Post – Canadian household debt ratio climbs to record in third quarter as mortgage borrowing hits $1.13-trillion – here
Globe and Mail – Key consumer debt measure hits record, as wealth also climbs – here
Statistics Canada – National balance sheet and financial flow accounts, third quarter 2013 – here
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