Canada household debt burden remains at record high
OTTAWA (Reuters) - Canadian households increased their debt load for the third consecutive quarter, keeping the debt-to-income ratio at an all-time high of 165.0 percent, although it rose much less than the previous quarters, according to Statistics Canada data on Friday.
Soaring personal debt has been a top concern of Canadian policymakers as consumers take out mortgages at ultra-low rates to buy homes in a heated real estate market.
The Bank of Canada in January predicted the trend growth in household credit would moderate and the debt-to-income ratio would stabilize at around current levels.
The debt-to-income ratio rose 0.3 percentage points in the fourth quarter from 164.7 percent in the third, much smaller than 1.5 and 1.6 point increases in the previous two quarters.
Statscan said household debt and income rose at roughly the same rate in the fourth quarter.
Households' credit market debt, which includes mortgages, consumer credit and loans, rose by C$14.7 billion in the quarter, about half the increase seen in the third, Statscan said.
Mortgage borrowing led the demand for credit in the fourth quarter, rising by C$11 billion to a total of C$1.1 trillion. In the previous quarter, mortgage borrowing increased by C$19.1 billion.
Consumer credit debt stood at C$477 billion at the end of 2012.
Worried about stretched personal finances and high housing prices, Canada's federal government tightened mortgage lending rules four times in the last four years to make it harder for home buyers to take on too much debt in their quest for a home. Continued...