Many Canadians engaged in dangerous dance with debt
Posted Feb 17, 2011 8:44 am.
This article is more than 5 years old.
A new report suggests the average family debt in Canada has now hit the $100,000 mark.
The Vanier Institute of the Family puts the debt-to-income ratio at 150 per cent.
That means that for every $1,000 in after-tax income, Canadians families owe $1,500.
Report author Roger Sauve tells 660News he first sounded the alarm about household debt levels four years ago.
Sauve estimates that across the country, one million households are overextended financially.
He says many of those families would be forced to declare bankruptcy if the primary wage earner lost their job, or if interest rates rose by a couple of points.
Sauve believes Canadian home prices are inflated and predicts prices are going to come down by at least 10 per cent.
The number of households behind in mortgage payments by three months or more climbed to 17,400 in the fall of 2010. That’s up nearly 50 per cent since the recession began.
Canadians are also saving less, which is complicating the problem.
Back in 1990, Canadian families managed to put away $8,000 for a savings rate of 13 per cent.
Last year, the savings rate had fallen to 4.2 per cent, averaging just $2,500 per household.
