The Canadian consumer, meanwhile, might be benefiting from somewhat cheaper gasoline, but their spending capacity is stretched thanks to a record
high level of household debt.
The PBO identified four key downside risks to the private sector forecast: global growth, especially in the U.S. could be slower than anticipated; the appreciation of the Canadian dollar could adversely affect exports; sovereign debt issues in Europe could restrain recovery there and put upward pressure on global interest rates; and
the high level of household debt in Canada could restrain domestic demand.
At the heart of this uncertainty is
the high level of household debt.
So, in summary these are some of the themes we might expect to see in the next chapter — the impact of technology and the growth of Asia; the normalisation of monetary conditions; the effects of
higher levels of household debt; and the capability of our workforce and businesses to be flexible, innovative and adaptable.
This brings me to a third plot line: that is, how we deal with
the higher level of household debt and higher housing prices, especially in a world of more normal interest rates.
«However, historically
high levels of household debt and low wage growth will offset some of the positive impact of recent strong employment data, so consumers are likely to remain cautious.»
Though it boosts the economy in the short term,
high levels of household debt add pressure on the economy in the long run, as households are forced to cut spending in order to repay their debt.
We had among the most leveraged banks of any country, a house price boom as large as America's or Spain's, and
higher levels of household debt than any other country in the world.
It led to
the highest level of household debt in relation to income in the world.
High levels of household debt are a concern, that gets even worse when you realize how concentrated it is.
Despite
the higher level of household debt, Canadian household finances are stable with consumer bankruptcies down by 1.7 per cent and 90 - day - plus delinquency rate falling by 6.4 per cent year - over-year.
Not exact matches
«Canadian policy - makers have allowed
household debt to rise above the disturbingly
high levels reached in the U.S. in 2007, raising the risk
of a similar potentially disastrous deleveraging down the road,» Madani wrote.
«Domestically, the
household debt level is quite
high,» said Wong, a member
of the opposition Parti Keadilan Rakyat (PKR).
In its latest statement, it said «
household vulnerabilities have moved
higher,» which is how policy makers describe the troubling nexus between excessive housing prices in many cities and record
levels of household debt.
The central bank has concerns about the ability
of households to keep paying down their
high levels of debt when interest rates continue their rise, as is widely expected over the coming months.
Any number
of shocks could send Canada's house
of cards tumbling, the bank says, particularly
higher borrowing costs that pinches
households already carrying record
high levels of debt.
The third question we have focused on over recent times is the implications
of the
high and rising
level of household debt.
The low
level of interest rates means that even though
debt levels are
higher, the share
of household income devoted to paying mortgage interest is lower than it has been for some time.
Risks associated with the Consumer Discretionary sector include, among others, apparel price deflation due to low - cost entries,
high inventory
levels and pressure from e-commerce players; reduction in traditional advertising dollars; increasing
household debt levels that could limit consumer appetite for discretionary purchases; declining consumer acceptance
of new product introductions; and geopolitical uncertainty that could impact consumer sentiment.
In a low - inflation environment, nominal interest rates are also low, and
households are able to service much
higher levels of debt than they could in the past.
In the case
of the
household sector, both Mr. Flaherty and the Governor
of the Bank
of Canada are warning Canadians about their
high debt levels and urging them to curtail their consumption and to reduce their
debt.
This he presents unequivocally as good news, since it suggests an easing
of high, mortgage - driven
household debt levels that have been among Carney's more acute longstanding concerns about the Canadian economy.
One reason for trying to understand this complex picture is that the
level of household debt is relatively
high.
«Major declines in house prices and the continuing
high level of unemployment are reflected in the various measures
of household debt and credit.
«He doesn't want to leave any question about the independence
of the Governor
of the Bank
of Canada, but we have a situation under the Conservative government that has allowed record
household debt... and the bank is really caught between a rock and a hard place, because these
high debt levels create pressure for
higher interest rates, but inflation is very low.
Compare two
households — one in 1993 and the other in 2003 — that have the same percentage
of their income used in
debt service, and have the same gearing ratio (
level of debt as a percentage
of value
of house), but with the 2003
household having a
debt level nearly twice as
high as the 1993
household.
With national
household credit card
debt at historically
high levels, it may not seem prudent to discuss the notion
of using your credit card to pay your bills.
The possibility
of an increase in the prime rate offered by lenders comes as
household debt levels sit near record
highs.
The
high level of Canadian
household debt has been cited by the Bank
of Canada for years as one
of its top concerns.
On Tuesday, the budget office highlighted findings from 2012 Bank
of Canada research that revealed that
households headed by an individual aged 31 to 35 years old held the
highest levels of debt.
Nearly 7 million Americans have gone at least a year without making a payment on their federal student loans, a
high level of default that suggests a widening swath
of households are unable or unwilling to pay back their school
debt.
The Bank
of Canada has concerns about the ability
of households to keep paying down their
high levels of debt when interest rates continue their...
Earlier this month, the International Monetary Fund warned in its Global Financial Stability report
of Canada's
high debt levels and
higher - than - average pressure on Canadian
households» ability to pay down that
debt.
According to a study by ACA International, the
level of credit card
debt per
household is still very
high.
Similarly, a study from 2013 conducted at Northwestern University found that those who had
high debt relative to
household assets, reported
higher levels of stress, depression, and poor self - reported general health.
High levels of government and
household debt, heightened interest rate sensitivity, unfavorable demographic trends, weakened financial systems and complex global and financial inter-linkages mean that heightened macroeconomic volatility will almost certainly be a fact
of life in coming years and decades.
The growing burden
of student loan
debt: Young
households are repaying an increasing
level of student loan
debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with
high rents and home prices.
However, although
high levels of foreclosures, unemployment and
household debt are still hurting home prices, there are indications the worst
of the downturn is -LSB-...]
The market has been hit by a confluence
of policies: Ontario's Fair Housing Policy, including a foreign buyers» tax aimed at cooling the market; a new mortgage stress test targeted at protecting Canadians from dangerously
high household debt levels; and the Bank
of Canada's moves to increase interest rates.
This has inspired lots
of foreboding talk about how our «soaring»
household debt - to - income
levels are now
higher than U.S.
debt - to - income ratios were at the peak
of their housing bubble.
At a time when Canadians are grappling with historically
high household debt levels — upwards
of 163 per cent according to Statistics Canada — young adults are feeling insecure about their knowledge
of the financial implications
of homeownership.