Canadians spend more of our income keeping our debt in good standing than any other country in the G7, according to national statistics compiled by Better Dwelling, an online real estate newspaper.
Canada’s household debt servicing ratio, the percentage of disposable income spent on debt payments, is around 12%, which is about two-thirds higher than the average for G7 countries. While this is actually a lower figure than it has been in the past, due primarily to reduced spending during the pandemic, Canada’s numbers are still well ahead of its G7 peers. Income spent on debt servicing, including interest payments, is income not spent on goods or services and is seen as a drain on long-term productivity.
This statistic continues despite historically low interest rates. If rates begin trending upwards, much of this debt would become unsustainable, further jeopardizing a fragile economy.
Excessive debt can threaten the solvency of both individuals and businesses, and advice on managing or restructuring that debt now may avoid an insolvency later. Learn more about how we help clients manage debt via comprehensive insolvency solutions. We are here to help.