Canadians paid a record 15.2% of disposable income on debt service costs in the third quarter in a reflection of the sting from the central bank's 10 interest-rate hikes, the federal statistics office said Wednesday.

The debt service ratio has climbed for six consecutive quarters from 13.6% according to Statistics Canada figures. The current rate eclipses the 15.0% mark set in 2019 and back in 2007 as consumers took advantage of low-for-long borrowing costs to build up debt.

The biggest monetary tightening in decades has pushed some households into renegotiated mortgages where all of their payments go to covering interest and in some cases they are losing ground on loan principal, so much so the government recently laid out guidelines for banks dealing with clients in distress.

The Bank's rate hikes are working to discourage new borrowing with StatsCan reporting the slowest growth in household liabilities since 1990 of 3.2%. (MNI INTERVIEW: BOC Can Wait On Rate Hike- UofT Researcher) Consumer debt burdens loom large with the closely-watched ratio of household debt to disposable income little changed at 181.8% and household debt climbing to 102.8% of GDP from 102.1%.

Household Debt Service Ratio

Source: Statistics Canada