Research conducted by Statistics Canada shows that the national household debt to income ratio has declined slightly, dropping from 163.59% in the last quarter of 2014 to 163.25% for the first three months of this year. The head of the Credit Counselling Society says Canadians should keep paying down their debts.

photo_web_1681The current debt ratio means that the average Canadian owes about $1.63 for every $1.00 of disposable income earned annually. Some groups, such as the Fraser Institute, have recently argued that these debt levels are manageable due to the low interest rate environment and the types of obligations that Canadians are carrying. They point out that consumers are not piling up credit card expenses (which only account for 14% of all outstanding debts), but are instead taking out mortgage and student loans.

In a statement issued last week Scott Hannah, the president and CEO of the Credit Counselling Society, warned that the burden of servicing these so-called good debts will still be amplified if there is a sudden change in the economy.

“Assets on paper aren’t going to do you any good when you have bills to pay and food to put on the table.” he said. “Low interest rates are helping to keep things under control, but whether we like it or not, interest rates are going to increase. The best things consumers can do is take advantage of low interest rates and pay down their debts now instead of taking on more debt.”