OTTAWA – Prime Minister Stephen Harper has a suggestion for Canadians looking for a New Year’s resolution for 2013: go easy on consumer debt.
While most Canadians are living within their means, they need to be thinking about what could happen if interest rates suddenly rise, Harper told Global News national anchor Donna Friesen in an interview.
Statistics Canada reported earlier this month that debt levels were at their highest yet — for every dollar of after-tax income Canadians bring home, they’re borrowing more than $1.64.
“I’m convinced we’re now seeing a moderating trend in this, and I think it’ll start to turn down in the next year and a year or two, but we continue to urge people to have caution because eventually, interest rates will go up,” Harper said.
“You should be asking yourself, ‘If interest rates were a couple of points higher, can I really afford the debt load I’m taking on now?’ And so we just urge people to be cautious on that.”
Mortgage debt is the primary driver of higher consumer debt loads after years of low interest rates.
Statistics Canada said that between July and September of this year, households borrowed $27.3 billion, $18.4 billion of it in the form of mortgages.
Consumer credit levels increased by $7 billion to $474 billion.
Harper’s comments echo concerns raised in recent months by both Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney that debt levels are getting too high.
“That’s why the government is taking some measures to provide incentives to households not to borrow quite so much,” Harper said in the interview.
“But you know, the fact of the matter is, this is (a) decision that households have to make for themselves.”
Mortgage rules were tightened over the summer, including a reduction in how long Canadians can borrow the money for their house.
The housing market cooled off slightly afterwards and the Canadian Real Estate Association has said it expects that to continue into next year.
Harper says Canadians also need to look at the long-term picture, especially as baby boomers head towards retirement with uncertain pensions.
“What I’d say to all Canadians is balance your debt levels, balance your borrowing, and balance your ambitions in terms of house ownership with some savings as well,” he said.
Meanwhile, don’t panic about the world, Harper said.
While things may look gloomy in the U.S. and Europe, Canadians need to focus on their own prosperity, he said.
“Let’s focus as a country, and focus as an investor or worker, on what you can do to make your job and your company more competitive in the years to come,” he said.
“That’s what we’re focused on.”
Gas Prices
680News Android App
Weather Guarantee
Advertiser Directory
The Government has kept interest rates too low for far too long. Now people depend on 3.5% mortgage rates. Three things have killed families in Canada; dual incomes, RRPSs and taxes. Most Canadian families are financially worst off than a generation ago where one income as the norm since dual incomes were only a temporary boost to families. Most used to buying power to bid up home prices. RRSPs killed company pension plans and our regressive tax system has had a punitive affect on the higher household incomes. End effect is that Canadians now pay a much higher proportion of their income in taxes and mortgage payments than ever before.
Well, I guess it’s easy for politicians to say this while they earn high salaries but the average “joe” has to keep up with housing and ever increasing rents and taxes to live a moderate lifestyle in Canada , housing and heating and transport with never ending bills, and difficulties with what Harper said before cohabiting together to decrease costs, while no politician has really looked at the serious difficulties being faced, when the workforce year after year shows it’s disgust with strikes and demands for better pay, then something really needs to be addresed!!