The high levels of Canadian household debt should not be viewed in isolation a new report from the Fraser Institute says.
While household debt has risen to $2 trillion, far above the $357 billion of 1990; household net worth has increased to $10.3 trillion, up from $2.2 trillion in 1990.
“Despite alarmist headlines, concerns about Canadian household debt levels can be overblown. When looking at debt levels it’s important to consider the degree to which Canadians are also using it to increase their net worth,” said Livio Di Matteo, a senior fellow with the Fraser Institute, professor of economics at Lakehead University and author of Household Debt and Government Debt in Canada.
Di Matteo says that while governments highlight household debts, driven mostly by the 65.5% that is mortgage loans, the level of government debt is “arguably a more pressing concern.”
He said that since 2007, government debt has increased while net worth has decreased.
“It’s somewhat hypocritical for governments to warn Canadians about rising household debt levels given the state of their own finances,” Di Matteo said.