The amount Canadian households owe relative to their income rose in the third quarter. Income gained 0.8 per cent in the quarter, while household credit market debt rose 1.2 per cent. Statistics Canada says there was $1.83 in credit market debt for every dollar of disposable income that households had in the July-to-September period. Canadians now have $2 trillion in mortgage debt and $722 billion worth of other types of debt.
“Both mortgage and non-mortgage loans grew despite aggressive rate hikes throughout the quarter,” Bank of Montreal economist Shelley Kaushik noted, with mortgage debt hitting $2.07 trillion and other forms of debt hitting $722.6 billion.
Meanwhile value of Canadians’ assets declined, causing national net worth per capita to fall 3.8 per cent to $438,815.
“This is the first time since the global financial crisis, when wealth fell 8.5 per cent peak-to-trough, that Canada has seen back-to-back declines in household wealth,” TD Bank economist Ksenia Bushmeneva said of the data. “As Canadians dedicate more of their income to debt servicing, hard choices will be made with respect to discretionary spending, which we expect to be very modest next year.”