Statistics Canada says that the ratio of household credit market debt to disposable income reached a record high in the last quarter of 2015.

In the national balance sheet and financial flow accounts it published on March 11, Statistics Canada says that the ratio of household credit market debt to disposable income (excluding pension entitlements) increased from 164.5% in Q3 to 165.4% in Q4 of 2015. "In other words, households held $1.65 in credit market debt for every dollar of disposable income," says Statistics Canada. The report also notes that disposable income increased at a slower pace than debt, and only grew 0.6%.

Significant increases in delinquencies

The Credit Counselling Society responded to the news by warning that these elevated debt levels could leave Canadians vulnerable to external shocks. It points out that two credit monitoring agencies have recently reported significant increases in delinquencies: last month TransUnion indicated that auto loan delinquency rates have climbed nearly 10% and are at their worst levels in four years, while Equifax reports that debt delinquencies in Alberta have increased by 25%.

“Interest rates have been hovering at a low level for a long time, which has played a significant role in spurring Canadians’ appetite for taking on more debt,” comments Credit Counselling Society CEO Scott Hannah. “Taking on this level of debt may seem manageable at the time, but an unexpected repair, a job loss or a jump in interest rates could really send your finances into a tailspin.”