For every one dollar Canadians earn in one year, we owe $1.63. The latest figure from Statistics Canada is shocking when you consider that not even twenty years ago we owed less than our annual income.
Economists see the debt-to-income ratio of 163 as a warning sign that the national household debt level will be unmanageable when interest rates eventually rise.
Debt-to-income is a metric used for and by banks and governments to determine the risk of default — specifically the ability to service debt on a regular basis. While the various debt-to-income ratios speak volumes about Canada's ability to cope with financial shocks on a macro level it gives very little information to individuals who want to know if they are in the danger zone.
Are you in the debt danger zone?
