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By Greg Quinn and Anahita Alinejad 
     OTTAWA (MNI) - Canadians are spending a record share of disposable 
income on paying off debts even as interest rates remain around record 
lows, government figures show. 
     The cost of interest and principal payments on consumer loans was 
14.93% in the second quarter, just ahead of the 14.87% in the 
first quarter. The ratio is the highest in Statistics Canada records 
back to 1990, and has climbed from 14.39% in the second quarter of 2018. 
     Those costs remained elevated even as the ratio of household debt 
to disposable income -- a barometer for policy makers of a possible 
slump in consumer finances -- declined for third quarter from a record 
     The ratio of household debt to disposable ratio fell to 177.1% in 
the second quarter from 177.5% in the first quarter. The measure peaked 
at 178.3% in the third quarter of last year. Disposable income grew by 
1.3% in the second quarter, faster than the 1% increase in household 
debts such as mortgages and credit card bills.
     The consumer debt buildup through a housing boom in Vancouver and 
Toronto has drawn the attention of the Bank of Canada and lawmakers. 
They have stepped in with new taxes aimed at curbing speculation and 
tougher mortgage qualification rules designed to prevent families from 
taking on too much debt. Today's report showed household debts climbed 
to 101.3% of Canada's gross domestic product, just shy of the record 
101.4% set at the end of 2016. 
     Bank of Canada Governor Stephen Poloz has said there are signs the 
housing market is stabilizing and borrowers are benefitting from a 
global drop in bond yields that has reduced the cost of renewing the 
popular five-year fixed mortgage. 
     Household affordability has become an issue in campaigning for a 
federal election on Oct. 21, with average prices for homes in Vancouver 
and Toronto often feteching a million dollars. Prime Minister Justin 
Trudeau on Thursday pledged to offer support for first-time home buyers 
if his Liberal Party is re-elected.  
     Statistics Canada earlier this year published a paper saying that 
comparing household debts to assets is probably a better indicator of 
whether borrowers will get into financial distress such as missing a 
bill payment. The ratio of houseohld debt to assets was little changed 
at 16.9% in the second quarter, near the middle of its historical range 
since 1990. 
     Consumer spending fueled by debt has led Canada's economic growth 
over the last decade. While the housing and debt boom is a concern, 
it has also been underpinned by record low unemployment and strong
population growth. 
--MNI Ottawa Bureau +1 613-314-9647;