The StatsCan data
found that the ratio is persistently growing, but at a slower rate than past quarters have suggested. However, even if the rate is slower, it is still a potential threat to financial stability, according to warnings from Bank of Canada Governor Mark Carney
and Finance Minister Jim Flaherty, who have warned about inevitable interest rate hikes.
Numbers also show that the figures are higher and exceed the peak of the United States consumer debt levels prior to the economic collapse in 2007 and 2008 that led to the Great Recession.
Due in part to low-borrowing costs and low interest rates, Canadians are holding more debt than ever before. Financial experts say that because Canadian consumers have such an exorbitant amount of debt, the economy cannot pick up due to a paucity of freed up cash reserves that can ignite consumer spending.
At the present time, current household debt in Canada is $1.65 trillion
, while more than two-thirds of this is related to mortgage debt. The remaining 30 percent, or $495 billion, is tied into credit card debt, lines of credit and much more.
reported last month that non-mortgage debt for the average Canadian is $26,768 with lines of credit, installment loans, auto captives and credit cards being the four contributing factors to this enormous debt level.
“The bank’s stress-test simulations continue to suggest that households are vulnerable to adverse economic shocks,” the Bank of Canada said in its June financial system review
. “Canadian households are vulnerable to two interrelated shocks: A significant decline in house prices and a sharp deterioration in labour market conditions. The vulnerabilities will increase the longer imbalances persist (or grow) in the housing market and the more household indebtedness rises.”