Canada’s Household Debt Is Spiraling Out of Control -
Friday , 22 January 2021

Canada’s Household Debt Is Spiraling Out of Control

Canada’s household debt…is spiraling out of control. Its debt load is the highest of the seven leading economic countries. The debt-to-income ratio is 174% with the average household carrying a debt of more than $22,000.

After a decade of easy credit, Canadians are finding it difficult to make even minimum monthly payments or interest payments. The slightest financial emergency can turn a difficult situation into a long-term disaster. Canadians are scared, and rightly so.

Canada wasn’t always in a state of unmanageable debt. It weathered the 2008 financial crisis reasonably well. However, like many other countries post-2008, it substantially lowered its interest rates, sparking a run on easy borrowing.

Thus far, the delinquency rate remains at below 1% but, never the less, over 31,000 Canadian households have filed for bankruptcy during the fourth quarter of 2018 alone.

  • Auto loan delinquencies are the highest since 2008. Many Canadians are leasing instead of buying, with leases accounting for 36% of all auto loans.
  • The housing market has dropped…raising some major concerns in a country already overburdened with debt. Home equity borrowing…accounts for 11% of total household debt…
  • Student loan debt stands at $28 billion, with many struggling just to make interest payments.
  • Canadians finding themselves in emergency situations have turned to payday loans and are now facing enormous interest payments…

Fortunately, Canada’s labor market is still relatively strong…[but when] it faces a recession, as it eventually must, the high household debt could prove a disaster for many.

Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)

One comment

  1. I really liked the article on Canadian ‘household financial debt’ since it tells smug Canucks that we aren’t superior to other first world nations…a belief that emerged during the mortgage and financial markets problems of 2008 +/-.