07/16/2013 01:56 EDT | Updated 09/15/2013 05:12 EDT

Canadian debt levels still better than U.S. experienced before crash: TD Bank

OTTAWA - Canadians have certainly been piling up debt but the situation isn't as dire as some have suggested, TD Bank argues in a new analysis.

The bank says official statistics on household debt-to-income ratios suggest Canadians are now as indebted as Americans were in 2007 — just before the U.S. housing crash.

The analysis notes Canadian indebtedness is 162 per cent of disposable annual income — only one percentage point below the 163 per cent peak reached by U.S. households in 2007.

But TD argues there's a world of difference between how the two countries calculate disposable income.

The U.S. figure doesn't include interest payments on non-mortgage debt, as the Canadian figure does, nor does the U.S. adjust for out-of-pocket health care costs paid by individuals, which tend to be higher south of the border.

If these and other methodological differences are accounted for, TD says the debt-to-income measure in Canada falls to 156 per cent, while the pre-slump peak in the U.S. rises to 177 per cent.

Canadian levels of indebtedness is closer to the current more healthy situation in the United States, the paper says, not to what existed before the crash.

Other measures, such as affordability of debt, also put Canadian household finances in better light, the bank says.

TD Bank concludes that while still high and worrying, Canadian household finances are in far better shape than their U.S. counterparts were before the crash.