New Statistics Canada study reveals signals of financial distress
“Families with a higher debt ratio are more likely to report experiencing various financial problems, such as skipping or delaying payments, or using payday loans,” the study found.
Specifically, Statistics Canada reported that among households with a debt-to-asset ratio above 0.5 — indicating that the value of their debt is more than 50% of the value of their assets — 16% missed a non-mortgage payment (such as a credit card, or household bill, payment) in the previous year.
Whereas, for households with a debt ratio below 0.25, only 7% missed paying a bill.
Households with higher debt ratios were also significantly more likely to miss a mortgage payment, the study found.
He noted that 7% of households with a debt ratio above 0.5 missed a mortgage payment, compared to only 2% of households with a ratio below 0.25.
Statistics Canada said the relationship between households with higher debt ratios and financial hardship is less clear.
Other factors that are correlated with financial distress, he reported, include household income level, home ownership and family composition.
For example, Statistics Canada found that single-parent families are “three times more likely to use payday loans than childless couples” and that these households are also more likely to miss a mortgage payment.