The Canadian household credit market debt as a proportion of household disposable income remained at 177.6 per cent in the first quarter, as debt and income grew at similar rates.
In other words, there was $1.78 in debt for every $1 of household disposable income, according to data released on Thursday by Statistics Canada.
The federal agency said total credit market borrowing edged down to $20.2 billion from $20.6 billion in the previous quarter. Demand for consumer credit and non-mortgage loans declined to $7 billion, while mortgage borrowing reached $13.2 billion, it said.
“Credit market debt (consumer credit, and mortgage and non-mortgage loans) totalled $2,230.6 billion in the first quarter. Mortgage debt totalled $1,454.2 billion, while consumer credit and non-mortgage loans stood at $776.4 billion,” explained StatsCan.
“The household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, edged up to 14.9 per cent in the first quarter, as total obligated debt payments grew at a faster pace than disposable income. Mortgage interest payments (+4.0 per cent) have outpaced mortgage principal payments (-0.4 per cent) as a result of higher interest costs, continuing a trend since the second quarter of 2018.”
It said the household sector’s net worth rose 2.7 per cent to $11,114.1 billion in the first quarter, primarily the result of a four per cent increase in the value of financial assets, led by a 7.8 per cent rebound in the value of equity and investment fund shares.
“Holdings of life insurance and pension funds also contributed to the increase, rising 2.6 per cent in the quarter,” said Statistics Canada.
“Financial liabilities edged up 0.2 per cent, the smallest quarterly increase since the first quarter of 2011. Slight increases in the value of outstanding mortgage and non-mortgage loans were moderated by a decrease in the value of consumer credit. As a result, the debt-to-asset ratio fell to 16.8 per cent. The value of non-financial assets rose 0.3 per cent to $6,249.1 billion in the first quarter, as residential real estate edged up 0.4 per cent. This increase followed two consecutive quarterly declines in the value of residential real estate as price growth continued at a sluggish pace.”