Currently, the average Canadian household owes $1.80 for every $1 of income. This situation would be problematic for older people who have not saved enough for retirement, but for younger generations it is often necessary. The debt-to-income ratio doesn’t measure the size of the debt itself, but rather the likelihood of default. Note that the biggest cause of debt is home mortgages, and often house values appreciate. It has been argued that investing in a home provides a better return for the risk than investing in stocks as well as being able to live rent-free in your investment. As they age, younger mortgage owners will see their their income rise and debt decline. Provided they manage it well, their debt-to-income ratio isn’t a problem.

“The fact that the average Canadian household owes $1.80 for every dollar it takes in each year could spell trouble for older folks who have not saved enough for retirement, but for younger Canadians trying to get an equity foothold, it’s a necessary evil.”

Read more: https://www.bnnbloomberg.ca/personal-investor-high-debt-to-income-ratio-so-what-1.1265582