Household debt hits new record

OTTAWA—Canadian households have hit a dubious new record for debt.
Fresh Statistics Canada data shows the ratio of debt to personal disposable income rose to 152 percent last quarter, up from 150.6 at the end of 2011.

The number likely will be of concern to Mark Carney, who heads the Bank of Canada, which warned again this week that the record level of household debt leaves Canadians vulnerable to an economic shock.
The first quarter numbers show that despite the increase in debt as a percentage of disposable income, borrowing actually slowed—by 0.9 percent.
As well, household net worth rose to $185,800 from $182,900 the previous quarter—mostly due to gains in the value of stock investments and pension assets.
During the first quarter, Canadians were modestly better off financially with their credit market debt as a percentage of assets falling slightly to 24.9 percent from 25.1 percent.
Still, Carney has warned that much of the appearance of financial soundness is based on home price values remaining at elevated levels.
A drop in house prices would erode their wealth while an economic shock or rising interest rates would leave many households challenged to meet monthly interest payments.