Sometimes, recessions can breed a hunker-down-and-save mentality.

Not so this time. Canadian household debt - a perennial worry in recent years - has ballooned to a point where it's now more than double 1989 levels - just as rising borrowing costs are set to squeeze budgets, a national report cautioned Tuesday.

Household debt in Canada reached a record $1.41-trillion in December. If that was spread among all Canadians, each person would carry more than $41,740 in outstanding debt - an amount 2.5 times greater than 1989 after adjusting for inflation and population growth, according to a report by the Certified General Accountants Association of Canada.

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And Canadians are okay with taking on still more debt. Nearly 60 per cent of respondents whose debt had increased through the recession - and 92 per cent whose debt decreased or stayed the same - still felt they could either manage it well or take on more debt.

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The recession has done little to dampen Canadians' enthusiasm for taking on debt, the 13-page study said.

"This report is another indication of Canadians' readiness to consume today and pay later," said Anthony Ariganello, president and chief executive of CGA-Canada. "The concern is do they understand the full cost of paying later?"

Canada now has the dubious distinction of ranking first in terms of debt-to-financial assets ratio among 20 OECD countries, with its debt-to-income ratio hitting 144 per cent by the end of last year.

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"The growth in household debt has been strong during good times and showed remarkable resilience during challenging times," said Rock Lefebvre, co-author of the report. Now, it seems "set to continue its upward trend as we navigate interesting times."

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The culture of consumption - or the habit of unrestricted spending - is likely one of the important factors explaining the unaltered trend in household borrowing, the report added.









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Mortgage rates - which have been trimmed in recent days - are higher than the start of the year, and poised to rise further as the Bank of Canada readies for a rate hike in the next month or two.

If mortgage rates rise by 2 percentage points, mid-income to mid-to-high income families may have to cut about 10 per cent from other expenditures if they want to maintain the same level of spending on shelter, taxes, food and transportation, the report said.

A separate report yesterday said almost half a million more mortgage holders would be in trouble if their rates hit 5.25 per cent. The study, by the Canadian Association of Accredited Mortgage Professionals, said about 375,000 mortgage holders "are already challenged" by their current payments.

Canada's personal savings rate -- which climbed during the recession -- is now starting to fall. The rate ebbed to 4.6 per cent in the fourth quarter, down from 4.9 per cent in the previous quarter, according to Statistics Canada data.

Tuesday's report, based on a partly survey of 1,530 people conducted in February, advised Canadians to consolidate their credit card debt and replace it with a lower-cost line of credit.

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"But it's still debt," Mr. Ariganello noted. "You don't want to hang onto it any longer than necessary."