New research shows consumer debt and the 'double-edged sword' of housing is leading economic growth and creating imbalances.
"Housing has been a double-edged sword -- critical for wealth creation for middle-class households, but also leading to imbalances between assets and debt," according to the paper. Household debt is 185% of net disposable income in Canada, ahead of the next highest G7 reading of 151% in the UK and 102% in the U.S.
Other risks include the household debt service ratio climbing to 15%, a surge in families extending mortgage amortization beyond 30 years, and 45% of mortgages resetting at higher rates this year and next, the paper said. "The current higher interest rate environment has implications for younger households with larger mortgages to pay off, as risks to socioeconomic mobility emerge with barriers to homeownership." (See: MNI INTERVIEW: Peaking BOC Rate Rekindles Housing-Royal LePage)
