Pace of borrowing outstrips wage gains: StatsCan
OTTAWA (Reuters) — Canadian household debt as a share of income hit another record in the third quarter as the pace of borrowing outstripped wage gains, Statistics Canada showed on Wednesday.
The ratio of debt to disposable income rose to 166.9 per cent from an adjusted 166.4 per cent in the second quarter. That meant Canadians owed C$1.67 for every dollar of disposable income they had.
The Bank of Canada has flagged the high level of debt as a potential vulnerability for the financial system and is expected to update its view in a report on Thursday.
Years of low interest rates since the financial crisis, as well as rising home prices, have encouraged Canadians to take on more and more debt.
Household credit market debt, which includes consumer credit, mortgages and non-mortgage loans, rose 1.3 per cent to C$2.005 billion from C$1.98 billion in the second quarter. Mortgages made up the bulk of the total, standing at C$1.31 billion, while consumer credit was C$590 billion.
Disposable income increased by just one per cent.
Economists expect tighter mortgage rules announced by the government in October to help rein in excessive borrowing.
There have also been signs that families are saving at least part of the child benefit checks that the government began mailing in July.