Canada has the highest level of household debt in the G7, making its economy vulnerable to a global economic downturn, according to the country's housing agency.
In an analysis released today, Canada Mortgage and Housing Corp. chief economist Aled ab Iorwerth said the country's household debt has risen "inexorably" due to rising home prices.
Mortgages now account for about three-quarters of household debt in Canada. While household debt accounted for 80 percent of the size of the overall Canadian economy during the 2008 recession, it rose to 95 percent in 2010 and surpassed its size in 2021, he noted.
"By contrast, U.S. household debt fell from 100 percent of GDP in 2008 to around 75 percent in 2021," Ab Iorwerth wrote.
"While U.S. households reduced debt, Canadians increased theirs and this will likely continue to rise unless we address affordability in the housing market."
During the same time period, household debt also declined in the U.K. and Germany and remained almost unchanged in Italy.
The economist said the agency already sees "early warning signs" that more and more consumers are running into financial trouble.
Comments