Canadian debt levels exceed those of U.S. - MoneySense

Canadian debt levels exceed those of U.S.

Carney issues third warning on debt, stays mum on possible regulatory action.


Bank of Canada Governor Mark Carney has issued his third warning on Canadian household debt levels in less than a week, adding Tuesday that borrowing in this country has entered “uncharted territory’’.

Carney told BNN that Canada’s debt-to-income ratio is higher than that of the U.S. for the first time in 12 years, and while interest rates will likely remain where they are until mid-2011 they may rise abruptly, raising the ratio further still.

According to Statistics Canada, the ratio of household debt-to-disposable income hit an all-time high of 148.1% in the third quarter, an increase of 6.7% over last year. The current ratio of household debt-to-disposable income in the U.S. is 147.2%.

Carney said the Bank of Canada was looking at ways in which to play a moderating role in the debt situation but wouldn’t elaborate. “We’re cooperating closely, we’re monitoring the situation, and if decisions have to be taken I’m confident that they would be taken at the appropriate time,’’ he told BNN. “These are not decisions for me to take, but the analysis and the perspective is something that we can provide and we have open discussions and the appropriate people, ultimately here, the Minister of Finance, will take those decisions or not, as is appropriate.’’