Canada ‘potentially vulnerable’ because of household debt: report

From the Toronto Star

A renewed warning on Canadian household debt levels is coming from a research report written by an international management consulting firm.

The report, published by McKinsey & Company on Thursday, singled out Canada and six other countries with “potential vulnerabilities in household debt.”
In Canada’s case, household debt levels are higher than those that existed in the U.S. at the peak of the credit bubble, the report notes.

The data suggests a “potential risk, but not an imminent crisis,” the report said.

“There is no sign that there are a significant number of Canadian borrowers today having trouble repaying their debt. The risk comes when you look to the future,” said Susan Lund, partner at McKinsey Global Institute in Washington, D.C.

“If the economy were to slow and unemployment started to rise, when people lose jobs, that’s when a mortgage that you could afford with a job suddenly becomes unaffordable. The other potential risk is if and when interest rates start to rise, that could create a much larger burden on households repaying debt.”

So what does that mean for Calgary which already has an obscene amount of household mortgage debt?  I hate to say it but what does it mean for Saskatchewan which has a high debt to income level.  


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