01/23/2018 10:47 EST | Updated 01/23/2018 10:52 EST

Household Debt: Ontarians To See Heftiest Payments Since At Least 1990, Watchdog Warns

The average Ontario household owed nearly $154,000 in 2016, up from $119,000 in 2010.

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TORONTO — Ontario's fiscal watchdog says household debt in the province has increased since 2010, and is projected to continue to grow, which could spell trouble for the economy as interest rates also climb.

Ontario's Financial Accountability Office says low interest rates have fuelled spending in the province and the household debt has grown by 5.6 per cent on average each year between 2010 and 2016.

The FAO says that during that same period, growth in household disposable income grew by only 3.4 per cent on average, per year.

Watch: What happens when there's an interest rate hike?

It says the average Ontario household owed nearly $154,000 in 2016, that's up from $119,000 in 2010.

"As interest rates increase, the share of households' income spent on debt payments is expected to rise from 13.9 per cent in 2016 to 15.3 per cent by 2021, the highest share recorded since at least 1990," the FAO said in its report.

Earlier on HuffPost Canada:

The budget watchdog says that a sharper than expected interest rate hike could force households to cut back on spending and have negative implications for the broader economy.

The report attributes the growth in household debt primarily to residential mortgages.

— The Canadian Press with a file from HuffPost Canada

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