Canadian Households' Debt Surpasses Economy
Housing Agency Warns: Household Debts Surpass Canada's GDP
Canada has a problem with debt. Canadian households have more debt than any other G7 country. The amount owed is larger than the country's economy. A deputy chief economist with Canada's housing agency issued a warning in a recent report.
Canadian Households Not Paying Down Debt, Unlike Other Countries
Pete Evans wrote a blog post for CBC News. The blog is about the benefits of a healthy lifestyle. He believes that a healthy lifestyle can improve your mental health and well-being. Evans also recommends getting enough sleep, exercise, and fresh air. He suggests eating healthy foods and avoiding processed foods. Overall, Evans stresses the importance of taking care of your body and mind to live a happy and fulfilling life.
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"Canadians Tackle High Living Costs"
Canadian homes owe more money than any other G7 country. In fact, they owe more than the whole Canadian economy!
Canada's housing agency is called the Canada Mortgage and Housing Corporation. They wrote a new report. The report talks about Canada's housing market. The agency helps the market with mortgage insurance. The report says something important. It says that people are spending too much money on housing.
On Tuesday, the CMHC's deputy chief economist Aled ab Iorwerth released a report. He said that since Canadian households have accumulated so much debt, Canada's economy is more vulnerable to any crises.
He said Canada has a lot of household debt. Canada has the highest in the G7. This can make the economy at risk during a global economic crisis. In the U.S. in 2007 and 2008, a similar situation happened.
Canada's household debt is now 107% of the country's GDP, which has increased in recent years. In 2008, it was only at 80% before it reached 95% in 2010. Due to the pandemic, it surpassed 100%.
The United States has lower household debt compared to Canada. From 2008 to 2021, household debt in the US dropped from 100% to 75%. Other countries like the UK and Germany also decreased their household debt. However, in Canada, household debt increased. It is predicted that it will continue to increase unless affordability in the housing market is addressed.
The CMHC report warns about high debts. Another report from the Bank of Canada also warned about high mortgage costs. These warnings are important because they could harm the economy.
The central bank raised its lending rate a lot to lower high inflation.
People with variable rate mortgages are feeling the effects of higher rates quickly. The central bank says that people with fixed rates should also be prepared for this impact when it's time to renew. This will happen in the next few years.
The CMHC cautioned that when families suddenly face a lower income than before, it becomes a problem for the economy. Families can manage their debt as long as their income is stable.
The report said that lots of people are having money problems. They might not be able to pay back their loans. This is especially true for people with mortgages.
Maximizing Mortgage Debt: A Major Challenge
Most Canadian household debt is linked to mortgages, according to the CMHC report. To tackle the debt issue, we need to consider the state of the housing market in the country.
Canada's increasing house prices means that people are taking on more debt. This leads to an increase in the total amount of debt in the economy. According to ab Iorwerth, if people want to own homes, they need to reduce their debt by making housing more affordable in the long term.
Inflation went up unexpectedly because of higher prices for houses and groceries. A video is available to watch for more information.
Rising Housing & Grocery Costs Trigger Unexpected Inflation Surge
CIBC economist Benjamin Tal thinks Canada is having a big problem with housing affordability. It's been going on for a long time.
More people coming to live in Canada has caused a housing problem. The government is working hard to build more houses. However, we also need to stop thinking that everyone needs to own a home.
He said that we should imagine a scenario with a 35-year-old person who is married, has two children, and rents a home, without any problems.
Things are getting bad. It's like a crisis now. We need to fix it by including rentals as part of the solution.
Pete Evans is a writer for CBCNews.ca. He used to work for newspapers like the Globe & Mail, Financial Post, Toronto Star, and Canadian Business Magazine. You can find him on Twitter at @p_evans or email him at [email protected].
The information in this blog comes from Meegan Read from CBC.
