Statistic Canada (StatsCan) reported end 2009 Canadians’ household debt was a record $1.4 trillion, or 144% of disposable income. According to a recent report by the Certified General Accountants Association of Canada (CGA) this debt to income ratio is the worst among 20 advanced countries in the Organization for Economic Co-operation and Development.
Individual Canadians and Canadian Governments took on more debt during the recession. Interest rates have been at historic lows, and can only go up. Will individuals be able to service debt at higher interest rates?
Not many folks seem to realize present personal debt levels aren’t sustainable. Canadians have lived with easy, cheap credit for so long, they do not see dangers of continuing to buy now and pay later. Sadly, when the credit crunch comes, Canadians will blame banks, Government, and others … everybody, but themselves!
Folks with low variable rate mortgages must understand nobody made them take these mortgages. It’s easy to blame finance institutions for individual, irresponsible debt acquisition, but at the end of the day, each mortgagee signed a contract … the financial institution “didn’t make you do it!” Borrowers are not victims!