To illustrate the vulnerability of households, both to increases in borrowing costs and to further growth in indebtedness, the Bank conducted a series of stress tests, which we published in the December issue of our semi-annual Financial System Review.
Using the current path of household indebtedness, and alternative assumptions about how quickly interest rates may increase, the simulation generates a scenario indicating that, by the middle of 2012, almost one in ten Canadian households would have a debt-service ratio that makes them vulnerable to economic shocks.