Canadian Household Debt

Excerpt from “Central bank body warns of rising threat of Canadian financial crisis”
MICHAEL BABAD - The Globe and Mail

Published Monday, Mar. 06, 2017 6:10AM EST

The Bank of Canada has cited the vulnerabilities of many households with debts gone wild.
At more than $2-trillion in outstanding balances, Canadian households have the highest level of debt, as a share of the economy, among countries that make up the Group of Seven, as Royal Bank of Canada economist Laura Cooper noted in a recent study.

She cited the fact that we owed $1.67 for each $1 of income by the third quarter of last year.
“Interest rates are expected to rise gradually and still remain at historically low levels, but our estimates indicate debt servicing costs could rise to 16 cents for every $1 of income by 2018 from 14 cents currently,” Ms. Cooper said.

“This would represent a record high, with two-thirds of the increase attributed to rising interest payments as borrowing rates climb.”

What does all this mean? Just a reminder to think carefully before borrowing against the equity in your home.