Debt repayments represent more than 30% of spending by low-income households
As much as half of low income households spend about 31% of their income to pay off debts, according to a new survey by charity group Prosper Canada.
In his recently published report, Prosper Canada also said that the debt repayment ratio of moderate-income households is on average 18%, while warning that “since this average applies to all households of these income levels, the rate of the income of households is probably much higher. “
And those levels could rise even more, the report warns.
“We can reasonably expect debt service ratios to increase in the coming months as many households continue to struggle with declining income and debt deferral plans offered by financial institutions. end, ”said Prosper Canada.
This will likely accompany a continued rise in consumer credit, driven by longer durations and higher principal amounts in “high cost lender installment loans,” which the report says is now the form of out-of-pocket credit. the fastest growing consumption in Canada.
However, “while mortgages are a major contributor to overall household debt levels nationwide, they are not the primary driver of low- and middle-income household debt,” said Prosper Canada. .
These trends reflect the Bank of Canada’s warnings about high levels of household debt. potentially derailed the nation’s economic recovery.
“Insolvency levels are expected to rise as emergency debt deferral measures cease and households whose incomes have still not recovered face higher debt repayments,” the bank said in a statement.