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Canadian household debt climbed to a record relative to disposable income in the second quarter, underlining what the central bank has called a key vulnerability in the economy.

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Canadians’ relationship to debt has changed, with middle and upper tier earners awash in red ink. Now the challenge is how to manage a country that’s deep in hock — and not likely to ever climb out.





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Credit-market debt such as mortgages rose to 164.6 per cent of after-tax income from 163 per cent in the prior three months, Statistics Canada said Friday in Ottawa. Credit-market debt rose 1.8 per cent in the second quarter, outstripping growth in disposable income of 0.8 per cent.

The Bank of Canada said Sept. 9 that risks to financial stability are evolving as expected, language that in the past has referred to the dangers linked to a housing and consumer debt boom. Governor Stephen Poloz has said there’s no housing bubble in Canada.