The cost of real estate in Greater Victoria led a year-over-year spike in personal debt in the region, according to a second-quarter report from Canada Mortgage and Housing Corporation (CMHC). The report says for every dollar of disposable income in Greater Victoria, households owe $1.89, the highest second-quarter debt-to-income (DTI) ratio for the region since 2015. Greater Victoria’s DTI of 189 per cent is third-highest in the country, trailing only Vancouver and Toronto. CMHC says Victoria’s 4.2 per cent quarterly increase, among the highest in Canada, is a result of growing mortgage debt and installment loans. The report says if you take away real-estate, Victoria has the lowest DTI in Canada at 30 per cent, compared to the national average of 39 per cent. The DTI ratio in Vancouver is highest in the country at 242 per cent, followed by Toronto at 208 per cent. CMHC says the DTI nationally hovers around 170 per cent, or $1.70 owing for every dollar of disposable income.The housing corporation says Canadians may find themselves more “vulnerable” to interest rate increases, leaving households with an increase in the amount required to pay their debt, which could exceed their original budgets. “The increased debt payment burden may come at the cost of reduced consumption, decreased savings or opting to make lower repayments on the principal,” the report said. “Some households might even default on their loans if their incomes are not sufficient to cover higher expenses and credit charges.” The CMHC warns if borrowers begin to default on their loans, banks may choose to scale back lending activity. “These negative effects could then impact other areas of the economy. Research has shown that recessions in highly indebted countries tend to exhibit a greater loss in output, higher unemployment, and last longer compared to countries with lower debt levels.” Last week, the Bank of Canada left its trend-setting interest rate unchanged at 1.75 per cent, but there are expectations there will another hike next year. The central bank has raised its key interest rate five times since July 2017. The report is based on analysis with data from credit monitoring firm Equifax, Statistics Canada and the Conference Board of Canada.