Household debt to outpace income
When interest rates rise, 10 per cent of Canadian households could be in financial trouble, according to a TD Economics study.
TD chief economist Craig Alexander said household debt, which includes mortgages, has become excessive as Canadians get more accustomed to easy borrowing.
“One in 10 is a high ratio,â€ Alexander told CBC News. “It looks to us that Canadiansâ€™ personal finances have gotten stretched.â€
Alexander also expects those debt levels to increase more rapidly than income growth.
The TD study said that even if the Bank of Canadaâ€™s overnight rate only rises to 3.5 per cent by 2013, family debt might still rise five per cent annually. That should be a concern, the report said, given its prediction that incomes will likely grow only by four per cent a year.