Canadians Debt-To-Income Ratio Higher Than Americans

The debt to income ratio of Canadians is now higher than Americans for the first time in over ten years according to information released on Monday.

The ratio of household debt to disposable income has climbed to a high of 148.1 percent, Statistics Canada announced on Monday, a 6.7 per cent rise on last year’s figures.

The Canadian ratio is now higher than that of the United States which is currently at 147.2 percent.
Bank of Canada Governor Mark Carney spoke in Toronto earlier this week about the rising debt amongst Canadians and the danger of borrowers being lured by historically low interest rates.

Mr Carney warned that whilst current low interest rates make borrowing seem relatively cheap, the costs will climb again and people may find themselves in financial difficulty, especially as the debt load of many Canadians is rising faster than their incomes.

Policy makers must now decide how best to safeguard Canada’s economy - reduce spending and risk limiting the country’s recovery or risk the population sinking further into debt.

Mr Carney said, “The responsibility obviously starts with the individual, it extends to the financial institutions, and then we as policy makers need to ensure that a suite of policies are appropriate to ensure sustainable growth.”

Canada’s income level has also fallen 1.5 percent during the last three months.