Assessing Canadian risk from elevated household debt
The Deputy Governor of the Bank of Canada (BoC), Agathe Cote, said that the proportion of Canadian households vulnerable to higher interest rates has climbed to above-average levels. She said in a statement,
“We estimate that if interest rates were to rise to 4.25 per cent by mid-2015, the share of highly indebted households would rise from slightly above 6 per cent in 2011 to roughly 10 per cent by 2016, while the proportion of debt held by these households would rise from 11.5 per cent to about 20 per cent over the same period.”
Household debt is currently at a record 153 percent of income and remains a potential threat to the Canadian economy. In an effort to curb debt growth, the government introduced tighter mortgage rules in July of this year.
What can be taken away from Agathe’s comments is that the Bank of Canada is performing essential stress tests to gauge an overall assessment of household finances. Such measures are necessary for the central bank to predict how mortgage rates will affect the average Canadian and their ability to manage debt if rates were to increase.
The Bank of Canada sets the key interest rate which influences variable mortgage rates. Cote remarks that the BoC has made progress in modelling risks to the financial system. 
Mortgage Rate Recap
Last Tuesday, RBC raised their discounted 3-year and 5-year fixed rates by twenty basis points each. And when one of the Big Five banks makes a move on interest rates, others usually follow suit. After RBC had increased their 5-year fixed rate to 3.69 per cent, TD made an identical move a couple of days later by advertising a discounted 5-year fixed rate at 3.69 per cent too. We may see similar moves from Scotiabank, CIBC and BMO later in the week.
Where are Canada Mortgage Rates this week?
Canadian Mortgage Rates in 2012
The average discounted mortgage rate in Canada for 2012:
Note: This is simply a small sample size and does not represent the entire market. It does, however, offer some useful insight.
 Bank of Canada