OTTAWA (Reuters) - Canada’s household debt is far higher than previously thought relative to income, Statistics Canada’s historical revisions revealed on Monday, heightening pressure on policy makers to address what they have called the biggest domestic threat to the economy.
And the rate was still rising to a new record in the second quarter — before the tightening of mortgage insurance rules. The ratio of household credit-market debt to disposable income jumped to 163.4 percent in the second quarter from 161.8 percent, according to revisions made to bring the agency’s methodology in line with updated international standards.
Under the old method, Statscan had reported a ratio of 152.0 percent for the first quarter.
The agency revised the ratio for 2011 to 161.7 percent from the previously estimated 150.6 percent.
The debt ratio is a key measure of the vulnerability of households to financial shocks, whether from a loss of income or a sharp fall in housing prices. A Statistics Canada analyst said the Canadian household debt-to-income ratio was well above that of the United States.
Reporting by Randall Palmer; Editing by Louise Egan