Jun 12, 2015

By Bob Komsic

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Seems Canadians have taken advantage of historically low interest rates to put their money into real estate and other assets.

That also raises the vulnerability of the financial system to any hike in interest rates or any kind of economic shock.

The Bank of Canada said Thursday a crash in housing prices that are overvalued by as much as 30% is still the biggest risk to the country’s economy.

Statistics Canada said Friday Canadians kept debt at almost record levels in the first three months of the year, even as they saw their net worth reach new heights.

Household net worth rose 3.4% to $8.65-trillion.

Total household credit market debt rose 0.7% in the first quarter of 2015 to $1.84-trillion, just below the pace of disposable income growth.

Non-financial assets held by Canadians, primarily real estate, rose 1.2% while net financial assets jumped 6.2%.

That gain was driven by a stronger American dollar, boosting the value of assets outside the country by Canadians.

Simply put, Canadians owed about $1.63 in consumer credit, mortgage and non-mortgage loans for every $1 of disposable income.

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