Canadian households wealthier than thought
OTTAWA — Canadian households appear to be managing their debt loads just fine these days, it turns out.
In fact, the ratio of debt-to-disposal income continued a downward trend in the first quarter of 2015, albeit at a slightly slower pace than before, Statistics Canada said Friday.
That ratio now stands at 163.3, compared with 163.6 in the fourth quarter of 2014, the federal agency said in a report. In other words, households owe $1.63 for every dollar that they can afford to spend.
The ratio of total household debt to assets stood at 17.8 per cent between January and March, down from 18.1 per cent the previous quarter and continuing a downward trend that began in 2009.
“Since then, asset prices have rebounded significantly, but the ratio of household debt to total assets has not yet returned to pre-recession levels,” the agency said.
At the other end of the ledger, household net worth to disposable income keeps going up, reaching a record ratio in the January-to-- March period of 767.1.
Even the Bank of Canada, which views household indebtedness as its top concern, tends to tread softly when assessing the state of consumer finances — and the impact on the economy and the banking sector.
“Overall, the regulatory and policy environment continues to ensure that the quality of Canadian household debt remains higher,” the bank’s policy-makers said Thursday in their twice-yearly Financial System Review. “As the economy stabilizes and interest rates begin to normalize, the most likely scenario is a gradual decline in this vulnerability.”
Borrowing costs are still extremely accommodating for consumers — thanks mainly to the near-historic lows in the central bank’s trendsetting lending levels.
Statistics Canada said households borrowed $23 billion in the first quarter of this year, up 0.4 per cent from the previous three months. Mortgages accounted for the bulk of consumer loans at, $15.9 billion, but that was down 0.8 per cent from the previous quarter.