Close X
Saturday, November 30, 2024
ADVT 
National

Household debt climbs to 162.6 per cent of disposable income: Statistics Canada

Darpan News Desk The Canadian Press, 15 Dec, 2014 10:49 AM

    TORONTO — Canadian household debt hit a record high during the third quarter, as it grew at a faster pace than disposable income, according to the latest figures from Statistics Canada.

    The total amount of credit market debt — which includes mortgages, non-mortgage loans and consumer credit — held by Canadian households increased to 162.6 per cent of disposable income during the quarter, from a revised 161.5 per cent in the previous quarter.

    That means Canadians owed about $1.63 for every dollar of disposable income in the third quarter.

    The previous record of 161.7 per cent was set in the third quarter of 2013.

    RBC economist Laura Cooper said the high ratio of debt relative to net worth will reinforce the Bank of Canada's cautious approach to raising its benchmark interest rate.

    "Consumers have amassed record levels of outstanding debt as a protracted period of depressed borrowing rates has sustained buoyant housing market activity," Cooper said in a note.

    The bank's overnight rate, which generally influences the interest rate charged by lenders for variable rate mortgages and lines of credit, has remained at one per cent for more than four years.

    Cooper noted that more timely data from the Bank of Canada suggests the accumulation of mortgage debt has settled into a more steady pace, although non-mortgage loans have picked up some of the slack.

    "Notably, the Bank of Canada perceives the risk of an unwinding of household imbalances as still low and against a strengthening economic backdrop is expected to raise the overnight rate in small, incremental hikes beginning in mid-2015," Cooper said.

    "We anticipate that while outstanding credit balances will likely rise further, this will be accompanied by steady income gains, resulting in the debt-to-income ratio stabilizing, albeit at elevated levels in upcoming quarters."

    During the quarter, households borrowed $27.4 billion, primarily mortgages.

    In total, Canadian households had $1,805 billion in credit market debt at the end of the third quarter — an increase of about 1.5 per cent.

    The increase was on par with the gain made during the previous quarter.

    Meanwhile, the debt service ratio — the amount of interest paid on mortgage and non-mortgage debt as a proportion of disposable income — declined to 6.8 per cent, an "all-time low," according to Statistics Canada.

    Both the mortgage debt service ratio and the consumer credit debt service ratio edged down during the quarter.

    Household net worth climbed 1.3 per cent during the quarter, after a 2.2 per cent increase in the previous quarter. Household net work was $232,200 on a per capita basis.

    MORE National ARTICLES

    Tory member Michael Chong's bill to re-empower MPs passes another hurdle

    Tory member Michael Chong's bill to re-empower MPs passes another hurdle
    OTTAWA — A Conservative backbench MP's bill designed to restore a measure of power to MPs in Parliament has passed another critical hurdle.

    Tory member Michael Chong's bill to re-empower MPs passes another hurdle

    Christmas likely can't come early enough for embattled Fantino, government

    Christmas likely can't come early enough for embattled Fantino, government
    OTTAWA — Longtime denizens of Parliament Hill know Veterans Affairs as a troublesome, thankless ministerial assignment, but it rarely generates the kind of sustained political heat the Harper government is hoping will dissipate with the coming Christmas break.

    Christmas likely can't come early enough for embattled Fantino, government

    Multibillion-dollar lawsuit against Big Tobacco now in the hands of judge

    Multibillion-dollar lawsuit against Big Tobacco now in the hands of judge
    MONTREAL — A class-action lawsuit that targets three Canadian tobacco manufacturers for nearly $20 billion has ended after nearly three years of testimony.

    Multibillion-dollar lawsuit against Big Tobacco now in the hands of judge

    Indonesian prosecutor opposes bid to dismiss case against Canadian teacher

    Indonesian prosecutor opposes bid to dismiss case against Canadian teacher
    JAKARTA, Indonesia — The prosecution in the case of a Canadian teacher facing allegations he sexually abused a kindergarten student at an international school in Indonesia has been in court to oppose a call by the defence for the case to be dismissed.

    Indonesian prosecutor opposes bid to dismiss case against Canadian teacher

    CBC shortens all local supper-hour TV newscasts to 60 or 30 minutes

    CBC shortens all local supper-hour TV newscasts to 60 or 30 minutes
    TORONTO — CBC will shorten all local supper-hour newscasts to 30 or 60 minutes and will broadcast Radio One morning shows on TV beginning next fall.

    CBC shortens all local supper-hour TV newscasts to 60 or 30 minutes

    Shania Twain Says In RCMP Video That Family Violence Is 'Never Acceptable'

    Shania Twain Says In RCMP Video That Family Violence Is 'Never Acceptable'
    OTTAWA — Country music superstar Shania Twain has lent her voice to an RCMP campaign against family violence.

    Shania Twain Says In RCMP Video That Family Violence Is 'Never Acceptable'