Canadians have taken on record amounts of debt in credit card purchases and real estate refinancing, say economists at CIBC World Markets in a report released Wednesday.

Encouraged by near historic interest rate lows, many property owners are taking out reverse mortgages or borrowing money against the value of their homes to finance other expenses.

“With house prices rising and mortgage rates falling, Canadian households have been pulling money out of their homes at a rate never seen before,” says economist Benjamin Tal.

Tal estimates that since 2001, the combined impact of real-estate refinancing and home equity loans has generated about $22 billion in added cash for Canadian consumers.

One the consequences of the increased borrowing is a jump in bankruptcies. The report notes that the number of bankruptcies is up so far this year, with more expected over the remainder of 2003.

Tal says Canadians’ debt-to-income ratio hit a record high of almost 103% in the year ending in April 2003, showing that people are borrowing more than they earn.

“While the debt-to-income ratio is rising, the more telling ratio, the debt to asset ratio, was largely unchanged over the past year — largely reflecting the recent increase in real estate values,” Tal’s report said.

The amount Canadians owed on their credit cards increased by 14 per cent in the year ended in April 2003

In a separate release, Industry Canada reported that bankruptcies were up by 4.1% for the first four months of the year, with 39,453 businesses and individuals declaring bankruptcy from January to April.