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Credit cards are displayed in Montreal on December 12, 2012.Ryan Remiorz/The Canadian Press

A growing segment of Canadian families is highly indebted, leaving them more vulnerable to any economic shift such as a job loss, illness or rising borrowing costs.

More than a third, or 35 per cent, of families had a debt-to-income ratio above 2.0 as of 2012, meaning their overall debt level was at least twice that of their annual after-tax income, a new paper by Statistics Canada finds. Back in 1999, that share was 23 per cent.

The findings are similar to the Bank of Canada's assessment of debt trends in Canada, which suggests much of the country's debt is concentrated in a few households. It noted in December that 12 per cent of households have a total debt-to-income ratio above 250 per cent, and that though this portion has been steady in recent years, it is almost double 2000 levels. These one-in-eight households hold about 40 per cent of overall debt.

The Statscan paper come as Canada's debt-to-income ratio has risen further, hitting a record 163.3 per cent in the fourth quarter of last year. The central bank has long cited household debt as a key risk to the economy, though it cut interest rates in January to counter another threat: lower oil prices.

The Statscan paper looks at trends in both household debt and assets held by Canadian families. It finds the value of both rose in the 1999-to-2012 period, though there were differences within types of families. Debt grew at a faster pace, for example, among those aged 35-to-44, couples with children under 18 and among people with mortgages.

By 2012, 71 per cent of all families had some debt, up from 67 per cent in 1999. (Its measure of debt includes mortgages and consumer debt like car loans, lines of credit, vehicle loans and student debt).

The median debt held by indebted families grew to $60,100 in 2012 from $36,700 in 1999, in constant dollars.

On the other side of the ledger, however, assets rose too. Median assets of families with debt rose by $179,800 over the same period to $405,200. (Its measure of assets include real estate and employer pensions).

This suggests "that the value of assets rose at least as rapidly as the value of debt for many Canadian families," the study said.

In fact, it said, median assets climbed by 80 per cent while median debt rose by 64 per cent.

"Most of the increases in debt values were attributable to rising mortgage debt," the paper said, adding that for assets, a big part of the increase was due to rising real estate values.

Thus the median debt-to-asset ratio remained "relatively stable" over the period, as the median Canadian family "had a debt corresponding to about one-quarter of its assets in both years. "

Such results suggest that Canadian families became more indebted over the period, "but did so against a backdrop of rising asset values, notably real estate worth."

Though both debt and assets increased for nearly all types of families, the size of the changes wasn't the same for all family types.

Here are some of the differences:

  • among couple families with kids under 18, median debt more than doubled, while median assets increased by 86 per cent.
  • families without children under 18 saw their median debt grow 88 per cent and median assets rise 78 per cent.
  • among families whose major income earner was between 35 and 44 years old, median debt rose by 126 per cent while median assets grew 77 per cent.
  • “for some family categories, increases in debt were not matched with a statistically significant rise in assets,” the paper said. This includes non-homeowners, single people and families whose main income earner was between 15 and 34 years old.
  • net worth rose the fastest among families in the top income quintile as they saw relatively big increases in their assets and smaller growth in debt levels.

The study is based on the 2012 survey of financial security, which was also conducted in 2005 and 1999. It was written by Sharanjit Uppal, senior analyst at the agency's labour statistics division, and Sébastien LaRochelle-Côté, Statscan's editor-in-chief of Insights on Canadian Society.