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Canadian Government to Impoverish Canadian Families Via Housing Affordability , debt on the Rise !

Here’s Why Parliament Doesn’t Care About High Canadian Real Estate Prices

DECEMBER 14, 2017
Canadian real estate prices have made a rapid rise, sending debt levels soaring. Despite the acceleration of household debt, the federal government has done nothing. Sure, we’re spending a few billion here and there, to study the issue. However, many people are wondering why there’s been no sense of urgency from Canada’s Parliament. That’s because in Ottawa, the issue doesn’t look all that concerning. Data from the Parliament of Canada shows that while debt levels are at all time highs, the debt service ratio isn’t. These data points don’t present the hair on fire issue that millennials feel exists in Toronto and Vancouver.

Household Debt Service Ratio
The household debt service ratio (DSR) is the ratio of income that goes towards servicing debt. That’s a bunch of fancy words to say the ratio of income that people use to pay for stuff they already bought, but still need to pay off. The more debt (especially housing) people buy, the higher this ratio goes. It becomes a concern to the government when this gets too high, because it gets hard for people to consume. Less consumption means a slower economy, and that’s not good for anyone. The federal government becomes concerned when this ratio reaches too high. Otherwise they just pretend to be concerned, to the extent required to win votes.

Debt Service Ratio Is Only 1% Higher Than Average
The debt service ratio is substantially lower than peak, and only slightly higher than average. The DSR rose to 14.17% in 2017 Q1, meaning 14.17% of income across the country went towards servicing debt. That’s a 5.15% decrease compared to the peak obtained in 2007 Q4. It’s also 1.06% higher than the 5 year average of 14.02%. While the debt-to-income ratio has climbed all the way up to 173.7%, the amount of income people devote to worshiping servicing debt hasn’t changed all that much. It’s also definitely not close to peak.

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