Is Canada’s record borrowing boom coming to an end?

Borrowed money has poured into the country's housing market, helping to push up home prices but also household debt levels. Scott Olson/Getty Images

Fresh data from Statistics Canada published Friday reminded us of what we already know – consumers and households are buried up to their eyeballs in debt.

But the borrowing boom appears to be tapering, as we test the outer limits on how much we’re willing to take on for a mortgage or renovation, or new car or any number of other sources we’ve been spending freely on in recent years.

READ MORE: The rise of the 8-year car loan

The much watched debt-to-income ratio – a snapshot of how much combined debt Canadian households are toting around compared to how much pay we’re taking home – has come down from an all-time peak hit in the fall of last year, Statscan says, if just barely. 

The ratio has stepped back to a shade under 164.0 per cent from a record 164.2 in the third quarter of 2013. The measure means that for every $1 in income earned by Canadians, we owe just under $1.64.

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It is a welcome development among policy makers and economy watchers such as the Bank of Canada, which has grown increasingly uneasy with the “exceedingly elevated” amount of money that is owed on home loans, credit-cards and the like.

The latest reading from Statscan shows debt growth “stabilizing” at 4 per cent annually – the slowest pace of growth since 2001.

“A moderation in credit growth is firmly underway,” RBC economists say.

READ MORE: Canadians reaching limit on how much they can borrow: bank CEOs

Still, others are more cautious.

“Canadian household debt ratios have edged lower but have yet to decisively break their multi-decade upward trend,” BMO chief economist Doug Porter said.

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Porter cited a “recent re-acceleration” of already lofty home prices as a sign that Canadians may not be dialing back that much.

Home prices climbed 5 per cent last month, according to Teranet National Bank home price index.

But Porter added: “We suspect that the cooling in home sales since last summer will eventually take the steam out of home prices – sales tend to lead prices by roughly six months – which, in turn, will keep a lid on mortgage and household debt growth.”

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