Capital Economics’ senior Canada economist, who has often sounded warnings about Canada’s housing market, released a report Friday in which he welcomed the OECD growth forecast of 3.2% for 2017.
However, Madani said that the debt-to-income ratio is 175% is “staggering” and far outpaces other G7 nations including the UK which is second for debt-to-income ratio at 149.5%.
He also warns that home equity lines of credit have risen sharply (up $13 billion in the 12 months to June 2017) and that house values remain “bubbly.”
The economist concludes that increased growth fuelled by credit risks building up household debt which could be a “natural disaster.”
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Household debt in Canada is “outlandish when compared to the rest of the G7” according to David Madani.