Household debt swells to record high
OTTAWA (Reuters) - The debt burden on Canadian households rose to a record high in the third quarter as mortgage and consumer credit increased but the net worth of households fell, Statistics Canada said on Tuesday.
The ratio of household credit-market debt, which includes mortgages, consumer credit and loans, to disposable income rose to 150.8 percent from 148.5 percent in the second quarter.
Bank of Canada Governor Mark Carney said on Monday that Canadians are now more indebted than their American and British counterparts and that household debt was the biggest, home-grown risk to the financial system.
Carney and Finance Minister Jim Flaherty say they are worried Canadians are sinking too deeply into debt as a result of very low interest rates, exposing them to the possibility of bankruptcy if they were to lose their jobs or if home prices were to fall sharply.
The Bank of Canada warned earlier this year that the number of Canadians who were vulnerable to an adverse economic shock had risen to its highest level in nine years.
Most economists, however, don't expect debt levels in Canada to spiral out of control.
"We expect credit growth to continue to moderate during the forecast horizon, which combined with our expectation of only modest increases in interest rates starting in the second half of 2012, should keep the costs of servicing the elevated debt loads manageable," said David Onyett-Jeffries, economist at RBC Economics.
Household net worth fell by 2.1 percent in the third quarter, its second straight quarterly decline. Canadians held more assets in the form of real estate but the value of their stocks and pensions fell.
National net worth - which includes households, corporations, governments and nonresidents - rose 1 percent to C$6.5 trillion ($6.31 trillion). Net worth grew in the corporate sector and fell in the government sector.
On a per capita basis, net worth rose to C$189,100 from
(Reporting By Louise Egan; Editing by Peter Galloway)
- Islamic State threat 'beyond anything we've seen': Pentagon
- British Muslims blame jihadi subculture after beheading video |
- Israeli air strike kills three Hamas commanders in Gaza |
- U.S. aid workers who survived Ebola leave Atlanta hospital |
- National Guard to withdraw from riot-torn Ferguson, Missouri |