Five Per Cent of Québec Households Carry Heavy Debt, as Opposed to 8% for All of Canada

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According to a special study conducted by the Bank of Canada and published in the December 2015 edition of the Financial System Review, the proportion of heavily indebted households (with a debt to gross revenue ratio greater than 350%) reached 8% in Canada for the 2012‒2014 period. Québec performed better than other provinces in this area, since only 5% of households had a debt-to-revenue ratio superior to 350% for this period. British Columbia showed the greatest percentage of heavily indebted households at 13.6%, followed by Alberta (10.9%) and Ontario (8.5%). Therefore, it comes as no surprise that the proportion of heavily indebted households is greater in the provinces where housing costs are higher. Mortgage loans account for an average 87% of these heavily indebted households’ debt.

Moreover, for nearly two out of every three heavily indebted Canadian households, the debt service (the amount of the monthly payments (capital and interest) made to reimburse the debt, divided by the household’s gross income) was lower than 40%. This critical threshold is often used to identify those households with a “vulnerable” financial situation.

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