Household debt reaches record high, again

Canadian household debt reached a record in Q2, surpassing the previous quarter’s record, Statistics Canada data showed on Thursday.

The ratio of household debt to disposable income rose to 167.6% in Q2, up from 165.2% in Q1. The figures indicate Canadians had $167.60 of debt for every $100 of disposable income.

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Household debt, which includes consumer credit, mortgages and other loans, climbed 2% in the quarter, rising faster than the 0.5% gain for disposable income.

Economists have warned about rising debt levels amid low interest rates and skyrocketing housing prices in Vancouver and Toronto. The BoC also says it’s watching household debt levels as a financial system vulnerability.

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Credit Counselling Society of B.C. president Scott Hannah says the household debt numbers are one cent higher than the average debt that was held by U.S. consumers when the severe recession hit in 2008.

Hannah says much of the U.S. economic collapse was linked to mortgages and notes the Canadian market is more robust, but he points to the recent slowdown in Vancouver’s home sales as proof that conditions can change rapidly.

The Credit Counselling Society is also flagging Stats Canada figures showing an 8.2% increase in non-mortgage debt among those over 65 years of age.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.