The Canadian Press
The average Canadian family’s household debt climbed to $96,100 last year, according to a study released Tuesday by the Vanier Institute of the Family.
The study estimated the average debt-to-income ratio for families at 145%. The institute said that’s the highest ratio ever recorded by the annual study, now in its 11th year.
There was a dramatic increase in late debt payments reported, with a 50% increase in the number of mortgage payments that were at least 90 days late, when comparing October with the same period in 2008.
There was also a 40% increase in the number of credit card holders who were at least three months behind in their payments in July from a year earlier.
While economic statistics indicate fairly clearly that a global economic downturn began to grip Canada seriously in about October 2008, it’s less clear about when the recession ended.
The Bank of Canada indicated last July that the recession was essentially over but the central bank and most private-sector economists also say the recovery will be slow and unemployment rates will remain higher than before the downturn.
“No one should conclude that recession worries are over in the homes across Canada,” the Vanier report said.
“For far too many, there is too little income, too much spending, too little saving and too much debt.”
“From a household perspective, there will continue to be high unemployment for some time, income growth will remain weak, and there is an urgent underlying need for many families to repair (or) strengthen their household balance sheets.”
The Vanier report also found signs of a housing bubble, with prices at about five times the average after-tax income of Canadian households. The report said the long-term average is 3.7 times over the past 20 years.
The study was released Tuesday just before Finance Minister Jim Flaherty officially announced plans to make it tougher for Canadians to take out mortgages, as concerns mount that too many Canadians are taking on more debt than they can handle.
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