1. Derek Burleton Vice President and Deputy Chief Economist June 2011 HOUSEHOLD DEBT IN CANADA: A REGIONAL PERSPECTIVE

2. RISING PERSONAL INDEBTEDNESS IS A CONCERN

3. DEBT GROWTH HAS OUTPACED GROWTH IN ASSETS AND NET WORTH

4. DEBT INTEREST PAYMENTS VULNERABLE TO FUTURE MONETARY POLICY TIGHTENING

5. CONSTRUCTION OF THE INDEX Debt-to-income ratio (15%) Debt-to-asset ratio (15%) Ratio of existing home prices-to-income (15%) Debt service ratio (20%) Share of financially vulnerable households (20%) Personal savings rate (15%)

6. SNAPSHOT OF CANADIAN HOUSEHOLD DEBT INDICATORS BY REGION IN 2010 Debt-to- Income Ratio (%) Debt Service Ratio (%) % of Vulnerable Households Debt-to- Asset Ratio (%) Home Price to Income Ratio Personal Savings Rate (2009) Can128.318.66.628.75.94.6 Atl.99.117.33.029.83.71.0 QC98.316.83.029.35.04.6 ON137.818.90.928.65.33.7 MB103.514.62.525.53.93.7 SK112.817.37.825.74.24.3 AB144.819.48.030.24.816.0 B.C.160.221.97.127.28.4-4.0 Source: Statistics Canada, Haver Analytics, CREA, Ipsos Reid

7. INDEX AIMED AT BUILDING A REGIONAL PICTURE

8. RISING VULNERABILITY A COMMON TREND

9. SOME OTHER COMMON TRENDS Rising household debt-to-income ratio and home price- to-income ratios have been the key drivers Debt-service ratios have been falling and remain in a comfortable range All regions will experience a substantial increase in vulnerability in coming years

10. B.C. Most Vulnerable Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio HHHHH M L LowMMedium H High Share of Vulnerable Households H

12. …WITH HIGH DEBT LEVELS

13. ALBERTA NEXT IN LINE… Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio HHHH M L LowMMedium H High Share of Vulnerable Households H L

14. … WITH RISE IN FINANCIAL STRESS

15. ONTARIO IN 3 RD PLACE… Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio HHHH M L LowMMedium H High Share of Vulnerable Households H L

16. …AS HOUSEHOLDS BORROW FOR CONSUMPTION PURPOSES

17. Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio L LowMMedium H High Share of Vulnerable Households H L VULNERABILITY IN SASKATCHEWAN ON THE RISE MMM L M

18. AND SASKATCHEWAN CATCHING UP

19. Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio L LowMMedium H High Share of Vulnerable Households H L QUEBEC IN GOOD SHAPE MM LLL

20. Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio L LowMMedium H High Share of Vulnerable Households AND SO IS THE ATLANTIC REGION M LLLL HH

21. RISK IN QUEBEC AND ATLANTIC REGION REMAINS LOW

22. Overall Rating Debt-to-Income Ratio Over Valued Housing Debt-to-Assets Personal Savings Rate Debt Service Ratio L LowMMedium H High Share of Vulnerable Households DEBT IN MANITOBA REMAINS MANAGEABLE LLLL M LL

24. MANITOBA HAS RELATIVELY LOW VULNERABILITY

25. CONCLUSION - HOUSEHOLD DEBT CRISIS NOT IN THE MAKING FOR ANY REGION Households susceptibility to adverse economic shocks varies across the country Balance sheet crisis not in the making – rather stage is set for a moderation in household debt Interest rates to move higher gradually Housing market to remain well balanced Economic growth to support healthy income growth

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