Canadian Household Debt Hits New Record High
Announced today from Statistics Canada, Canadian household debt hit another record high this quarter. The numbers have been slightly revised, but households on average owe 1.67 in debt for ever dollar of income earned. So what does this have to do with Vancouver real estate? Everything. Debt and cheap credit has been called the “drunken brew” fuelling real estate prices according to CMHC boss Evan Siddall. Massive mortgages and financially strapped Canadians is putting the Canadian financial system at risk. It’s why Canadian Finance minster Bill Morneau introduced the Stress Test and will likely introduce risk sharing with the banks in 2017. These costs will then get tacked onto your new mortgage in the very near future. In fact, it’s household debt, 65.5% of which is from mortgages, that has the feds up at night. Which prompted RBC Economist Laura Cooper to say “the further deterioration in the oft-cited debt metric will serve to strengthen the Bank of Canada’s appraisal that elevated household indebtedness remains a key vulnerability to financial stability.”