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.
Not exact matches
According to the Institute
of International Finance (IIF), global
debt levels rose by a further $ 21 trillion last year (US dollars), leaving total outstanding
debt at $ US237 trillion, the
highest level on
record.
On the other hand, leaving the interest rate low encourages the kind
of borrowing and spending that has produced
record -
high levels of consumer
debt in Canada and pushed housing prices into the stratosphere.
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
record high levels of consumer
debt among Canadians has also raised a red flag from Bank
of Canada governor Mark Carney and others who have warned that interest rates will rise at some point — raising the cost
of borrowing.
Currently at
record high levels, BCHP funding will increase
debt for many home buyers who take advantage
of this program, as it will serve as a second mortgage owed to the British Columbia Housing Management Corporation.
Millions
of people can see at least some
of the major signs, such as the collapse
of interest rates,
record high number
of people not counted in the workforce, and
debt rising from already - unpayable
levels at an accelerating rate.
«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.
After all, the
debt - to - income ratio
of Canadians is at a
record high, close to the
levels experienced in the United States before its market crashed, and home ownership is at nearly 70 $, also a
record and five points more than its neighbours to the south.
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.
According to a recent Reuters report, global
debt levels are now at a
record high of $ 233 trillion, up from $ 142 trillion in 2007 and $ 87 trillion in 2000.
The possibility
of an increase in the prime rate offered by lenders comes as household
debt levels sit near
record highs.
Bank
of Canada Governor Mark Carney has repeatedly warned Canadians to simmer down on their borrowing costs — but that hasn't stopped us from racking up a new 8 - year
record high debt level.
So even with a
high level of debt, the carrying costs
of that
debt, are also at
record lows, so if you have a good income you can carry
high levels of debt.
As
of end - September 2017, margin
debt on the NYSE was a
record $ 559.6 billion, which is to be expected as U.S. equity indices were also near all - time
highs, and stock market peaks and
record levels of margin
debt often coincide.
«Will fiat currencies survive the policy dilemma that the authorities will experience as they try to balance
higher yields with
record levels of debt?