'Not a short-term fix': Canada's household debt amongst highest in G7

A new report from the Canada Mortgage and Housing Corporation shows a concerning rise in household debt.

Canada's household debt as a share of the country's GDP is up 12 per cent since 2010, exceeding the GDP by 7 per cent.

"Our concern is just the overall magnitude," said Aled ab lorwerth, CMHC deputy chief economist. "So we're talking about a level of household debt that's about the size of the economy."

Around three-quarters of the household debt lies in mortgages. While housing is considered an asset, ab lorwerth warns that the rising debt makes Canada more vulnerable to an economic collapse.

"If there are widespread job losses, then paying off mortgages in that circumstance is really difficult," he told CTV News.

In B.C., one economist tells CTV News approximately 40 per cent of homeowners in Greater Vancouver do not have a mortgage. However, a majority of homeowners with mortgages carry more debt than the average Canadian.

"No surprise in B.C. where home prices are the highest in the country, debt levels are also the highest in the country," said Brendon Ogmundson, chief economist with the BC Real Estate Association.

Ogmundson believes the high household debt will likely increase in the near future with ripple effects to the economy.

"As households have to renew their mortgages, that debt burden is going to get worse," said Ogmundson. "That's probably going to cut into consumption spending."

Ab lorwerth believes systemic change is required to address the issue.

"This is not a short-term fix, but unfortunately I think everything leads back to the need for more housing," said ab lorwerth. "That will put downward pressure on house prices and it'll mean less need to get into debt to pay for housing."

The CMHA is working on another report looking into the impacts of homeowners adjusting to higher interest rates. So far, the research suggests it is resulting in more Canadians facing financial hardship.