Household debt hits another record

OTTAWA — The amount Canadians owe compared with their disposable income hit a record high in the second quarter as per capita household net worth inched lower.

Statistics Canada said Friday household credit market debt as a proportion of household disposable income increased to 167.8 per cent, up from 166.6 per cent in the first quarter.

That means for every dollar of household disposable income there was $1.68 in credit market debt.

The increase in the debt ratio came as household net worth on a per capita basis fell by $1,300 to $285,900.

“A decline in household net worth, albeit modest, alongside a sharp increase in consumer credit growth are notable as together they suggest that the ability of households to absorb higher interest rates continued to deteriorate,” RBC economist Laura Cooper wrote in a report.

Household debt has been identified as a key risk for the economy as low interest rates have made it easier for Canadians to borrow money. However, rates have started to climb in recent months.

The increase in the debt-toincome ratio came as household income increased 1.2 per cent while household credit market debt rose 1.9 per cent.

Total household credit market debt, which includes consumer credit, mortgage and non-mortgage loans, totalled nearly $2.08 trillion in the second quarter.

Mortgage debt increased 1.6 per cent to $1.36 trillion, while consumer credit grew 2.4 per cent to $609.6 billion.