Key house­hold debt ra­tio creeps lower in first quar­ter to 168.0 per cent

The Guardian (Charlottetown) - - CLASSIFIEDS / BUSINESS - OTTAWA

The amount Cana­di­ans owe rel­a­tive to their in­come crept lower for the sec­ond quar­ter in a row as mort­gage bor­row­ing slowed along with a cooler hous­ing mar­ket.

Statis­tics Canada said Thursday house­hold credit mar­ket debt was equal to 168.0 per cent of house­hold dis­pos­able in­come in the quar­ter, its low­est level since the first quar­ter of 2016.

In other words, there was $1.68 in credit mar­ket debt for ev­ery dol­lar of house­hold dis­pos­able in­come.

The re­sult for the quar­ter com­pared with 169.7 per cent in the fourth quar­ter of last year.

“While the ra­tio gen­er­ally tends to fall in the first quar­ter due to sea­son­al­ity, the 1.68-per­cent­age point decline marks the big­gest im­prove­ment on record,” eco­nomic an­a­lyst Priscilla Thi­ag­amoor­thy of BMO Cap­i­tal Mar­kets.

“The steeper drop to start 2018 sug­gests we may fi­nally be at a turn­ing point as the one-two punch of stricter mort­gage rules and higher in­ter­est rates slow house­hold bor­row­ing, while in­come con­tin­ues to climb.”

The Bank of Canada has iden­ti­fied house­hold debt as a key vul­ner­a­bil­ity for the fi­nan­cial sys­tem, but the cen­tral bank noted that risk has less­ened in re­cent months along with wor­ries about the hous­ing mar­ket.

On a sea­son­ally ad­justed ba­sis, house­holds bor­rowed $22.2 bil­lion in the first quar­ter, down from $25.4 bil­lion in the pre­vi­ous quar­ter. Statis­tics Canada said mort­gage bor­row­ing fell $2.0 bil­lion to $13.7 bil­lion, the low­est level since the sec­ond quar­ter of 2014.

The slow­down came as tighter lend­ing rules and higher mort­gage rates helped cool the hous­ing mar­ket in re­cent months com­pared with its tor­rid pace at the start of last year.

Royal Bank se­nior econ­o­mist Robert Hogue said with growth in both mort­gage and non-mort­gage debt slow­ing, debt met­rics should con­tinue to im­prove in the near term.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.