Household debt grows faster than income – StatCan

The amount of debt Canadians owe relative to their income grew last quarter as debt growth slightly outpaced income growth, Statistics Canada (StatCan) said on Thursday.

StatCan reported that seasonally-adjusted household credit-market debt, as a proportion of disposable income, rose to 178.5% in Q4 2018, a bit higher than the revised reading of 178.3% in the previous quarter. That means that there was roughly $1.79 in credit market debt for every dollar of household disposable income in the fourth quarter.

Meanwhile, the household debt-service ratio, the total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, rose to 14.9% in the fourth quarter compared with the revised reading of 14.7% in the third quarter.

An increase in borrowing helped fuel the rise in the two key debt ratios.

StatCan said that on a seasonally-adjusted basis, households borrowed $21.2 billion in Q4 2018 as mortgage-loan demand rose by $2.3 billion to $12.3 billion. However, despite the increase in the quarter, on an annual basis, household credit-market borrowing fell by 19.5% to $84.6 billion last year, the lowest level of borrowing since 2014.

Credit-market debt, which includes consumer credit and mortgage and non-mortgage loans, totalled about $2.21 trillion last quarter. Mortgage debt reached about $1.44 trillion, while consumer credit and non-mortgage loans combined amounted to $769.4 billion, according to a report by The Canadian Press.

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