Canada Increasing its Debt

According to the Parliamentary Budget Office, Canadians are continuing to increase their debt even though the interest rates are expected to be increased.

Households that have debts are gone up to 174%($174 for every $100 in disposable income) in the 1st quarter of this year.

The ratio of the so-called “indebtedness” has gone up to more than 170% just years ago—2015—from a time space of 9 years—2002 through to 2011.

PBO has forecast the the debts of households to hit 180% by the end of the next year, 2018.

The Canadian policymakers are quite worried about the aforementioned type of debt.

In the first quarter of this year, households in the country have owed $14.20 in principal-and-interest payments on debt for every $100 in disposable income.

That number has gone up a bit from mid-2015, and is projected to increase further: the Parliamentary Budget Office expects it to hit $16.30 per $100 by the end of 2021.

“Despite a projected rise in interest rates, we expect household indebtedness to increase due to continued gains in real house prices and elevated levels of consumer confidence,”PBO.

 

The report included: The future ability of Canadian households to service their debt “will become stretched even further as interest rates rise to more ‘normal’ levels over the next five years.”

“Based on PBO’s projection, the financial vulnerability of the average Canadian household would rise to levels beyond historical experience.”

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