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article imageCanada's household debt is $1.5 trillion: CGAAC

By Samantha Emann     Jun 15, 2011 in Business
The Certified General Acountant's Association of Canada has stated that Canada's household debt has hit $1.5 trillion. What does this mean for Canadian families?
If the $1.5 trillion bill was spread equally among Canadians, the average debt for a two child family would be just over $176 thousand with the mortgage included, reports the Globe and Mail.
In a Toronto Star article, Queen's University finance professor Louis Gagnon said, "The amount of personal disposable income we count on could shift in the near future."
The same article reported that this new statistic puts us above the U.S. as far as debt ratios, which has not happened since the 1990s.
A Statistics Canada report published on April 11 stated multiple things, including that Single parents were more likely to have debt-to-asset ratios of 80 per cent or more.
9.6 per cent of single parent households have a high debt service ratio, while 3.8 per cent of two parent households with children under 24 have the same, according to a 2009 StatsCan survey. Debt service ratio is an individual's or a family's ability to honour their debts. Single parent families are more likely to be paying 40 per cent or more of their income to debt payments.
The percentage of two-parent households with children over 25 is only slightly lower at 3.6 per cent. According to the same survey, 4 per cent of unattached individuals have high debt service ratios as well.
The Globe and Mail reported that 27 per cent of working Canadians are not saving. The study by CGAAC, quoted in the article, said single parent families with an income of less than $50,000 were "six times more likely to be financially vulnerable in terms of their debt-service ratio.”
A trend stated in the StatsCan report was that Canadian born people have a 60 per cent lower chance of having a high debt load. Other factors for high amounts of debt include income, age and employment status.
Economist Diana Petramala was quoted in the Toronto Star article saying, "Unless households cool their pace of debt accumulation significantly in the near-term, the ability to grow their net worth will be constrained."
She also said that, "debt for the majority of households remains quite affordable,” because current interest rates are exceptionally low."
More about household debt, canadian debt, cgaac, Statscan
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