Canadian Debt Climbs to Likely All Time High, RBC Survey

September 3rd, 2015  |  Personal Finance

Low interest rates and pay raises are at the heart of Canadian’s consumer debt, says RBC survey, with totals reaching a record high debt burden of $1.84 trillion.

Despite a slumping economy and job layoffs across the country,Canadian debt load has climbed to a staggering 163.3% of the average household income. These new totals come in just shy of an all-time high for Canada and rank as one of the highest debt totals in the developed world.

RBC economist Laura Cooper stated that Canadians aren’t seeing the benefits of the low interest rates because they’ve “ ‘spent’ their interest savings on mortgage debt, not consumption.” In other words, people ended up spending money saved from low interest rates on buying a more expensive house.

RBC also noted that Canadian confidence in paying down their debt remains largely unshaken, thanks to low interest rates. But RBC remains concerned, stating that interest rates will rebound, leaving some households in dire financial straits.

“Even in the absence of a shock, Canadian households will have to adjust to higher debt payments when economic conditions permit interest rates to drift upwards,” Cooper added.

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