The soaring debt levels of Canadians have reached alarming heights, potentially endangering many households, particularly if there’s a further escalation in mortgage rates, says Phillip Colmar, the managing partner and global strategist at MRB Partners.

Recent figures from Statistics Canada reveal that the ratio of household credit market debt to disposable income surged from 181.7% in the final quarter of 2022 to 184.5% in the opening quarter of 2023. It’s estimated that Canadians borrowed roughly $16.5 billion in Q1, with $11.2 billion attributed to mortgage debt.

This surge aligns with the Bank of Canada’s decision to raise interest rates, elevating the central bank’s policy rate to its highest in 22 years at 5%.

In a recent discussion with BNN Bloomberg, Colmar cautioned that Canada might be on the brink of experiencing its most significant housing bubble ever.

He further emphasized the dangers of this situation, noting, that having a credit bubble as the foundation of a housing bubble is a recipe for disaster.

Colmar believes that it’s inevitable that policies will struggle to prevent the dramatic fall of these unstable conditions.

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