Canadian dollar coins or loonies are pictured in North Vancouver, B.C. Wednesday, May 29, 2019. Statistics Canada says Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter. THE CANADIAN PRESS/Jonathan Hayward

Canadian dollar coins or loonies are pictured in North Vancouver, B.C. Wednesday, May 29, 2019. Statistics Canada says Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter. THE CANADIAN PRESS/Jonathan Hayward

Household debt now $1.77 for every $1 in disposable income, StatCan says

The ratio was still below the $1.81 seen in the fourth quarter of 2019

Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter, Statistics Canada said on Friday.

In other words, Statistics Canada said, household debt as a percentage of disposable income rose to 170.7 per cent in the third quarter, up from 162.8 per cent in the second quarter.

The ratio was still below the $1.81 seen in the fourth quarter of 2019.

“With more cash and less spending, households were able to pay down some consumer debt. And while there has been a recent pickup, it remains below levels seen earlier this year,” said a client note by Priscilla Thiagamoorthy, economist at BMO Capital Markets.

Statistics Canada’s report said that while credit market debt rose by 1.6 per cent in the third quarter, household disposable incomes fell 3.1 per cent as Canadians recovered from job losses during the COVID-19 pandemic. Lower income households tended to have a higher debt to disposable income ratio, the agency has said.

While employment got within 3.7 per cent of its pre-pandemic levels during the quarter, it wasn’t enough to offset the wind-down of government supports, as employment insurance benefits dropped almost 50 per cent in the quarter, the report said.

But with COVID-19 restrictions keeping people close to home, household savings remained high during the quarter at $56.8 billion, down from a record of $90.1 billion in the second quarter, the agency said.

Households also benefited from rebounding mutual fund shares, amid a 3.9 per cent return on the Toronto Stock Exchange over the three-month period. Overall, the net worth of Canadian households rose three per cent to more than $12.3 trillion.

“Wealth distribution tends to be highly unequal across income groups, as a result, recent gains in net worth have disproportionally benefited Canadians who were already better off,” Ksenia Bushmeneva, an economist at TD Economics, in a note to clients about the household wealth report.

“Generally speaking, wealthier individuals experienced larger increases in savings as they were more likely to retain their jobs while also cutting back on discretionary spending such as travel and restaurants which remain largely unavailable.”

Meanwhile, there was a record rise in mortgage borrowing and housing investment hit its highest point on record as the cost of borrowing hovered at all-time lows, StatCan reported. Mortgage debt hit nearly $1.63 trillion as demand for mortgage loans rose to a new high of $28.7 billion.

“Clearly, cash is not always king, and having wealth — (whether) it’s financial or real estate assets — has really paid off this year with equities and real estate prices rallying,” wrote Bushmeneva.

Other key changes tracked in the report included household debt service ratio, which measures how much income goes to paying interest and principal. The household debt service ratio increased to 13.22 per cent from 12.36 per cent, after declining earlier in the year amid debt deferral programs tied to the COVID-19 pandemic. Many of these programs wound down at the end of the third quarter, Statistics Canada said.

“Canadian household finances are in better health this year thanks mainly to unprecedented government transfers which lifted overall incomes,” wrote Thiagamoorthy.

This report by The Canadian Press was first published Dec. 11, 2020.

Anita Balakrishnan, The Canadian Press

Just Posted

Terry Driver as he looked around the time of the killing of Tanya Smith and the attempted murder of Misty Cockerill in Abbotsford in October 1995. No current photos are available of Driver.
‘Abbotsford Killer’ Terry Driver denied parole, deemed ‘high risk’ to re-offend

Driver murdered Tanya Smith, 16, and seriously injured Misty Cockerill, 15, in 1995

Boats in the Fraser River launched from Barrowtown and Ft. Langley on May 12 to search for the missing fisherman. (Steve Simpson)
Boats search the Fraser River for missing Abbotsford fisherman

Anyone with ‘a boat, time, or a drone’ to help bring Damian Dutrisac home was asked to help

Mina Shahsavar is a fourth-year student in the bachelor of science in nursing program at University of the Fraser Valley and is an employed student nurse at Abbotsford Regional Hospital. (Submitted photo)
Nursing student in Abbotsford plans for career in critical care

Mina Shahsavar inspired during hospital stays as a child

The Canadian Forensic Health Corporation, made up of (left to right) Kirstin Simpson, Adrienne Fershau, Tiffany Kafka, Susan Short and Cole Bruce, are changing the game for the forensic nurse occupation. (Submitted)
Abbotsford nurses create Canadian Forensic Health Corporation

Tiffany Kafka, Susan Short, Kirstin Simpson, Cole Bruce and Adrienne Fershau teaching new generation

A pair of deer were spotted in Abbotsford on Tuesday (May 11) morning. (Submitted)
VIDEO: Pair of deer explore Abbotsford neighbourhood

Resident captures deer duo munching on foliage and then wandering off

B.C. Labour Minister Harry Bains in the B.C. legislature, May 13, 2019. (Hansard TV)
VIDEO: B.C. to provide 3 days of sick pay for COVID-19 absences

Province will support employers on cost, labour minister says

Brad MacKenzie, advocacy chair for the ALS Society of B.C., says having research projects in the province allows people here to have access to cutting-edge treatments now being developed. (B.C. government video)
B.C. funds research chair for Lou Gehrig’s disease at UBC

Pandemic has cut off patient access to international projects

In this Monday, March 15, 2021 file photo a vial of AstraZeneca vaccine is pictured in a pharmacy in Boulogne Billancourt, outside Paris. Questions remained Wednesday about the future of the Oxford-AstraZeneca vaccine in Canada, as Manitoba limited use of the shot and Ontario announced it planned to save an incoming shipment to use as second doses. THE CANADIAN PRESS/AP/Christophe Ena, File
Questions remain about the future of the Oxford-AstraZeneca shot in Canada

More than two million Canadians have received AstraZeneca and 17 have been confirmed to have VITT

A Mountie issued B.C. RCMP’s first ticket for non-essential travel May 1. (Black Press Media files)
Driver ticketed, told to ‘return to Lower Mainland immediately’ by Vancouver Island police

The motorist was originally pulled over for driving-related offences May 1

Children walk back to their classroom while wearing masks and physical distancing at St. Barnabas Catholic School in Scarborough, Ont., in October, 2020. A group of B.C. teachers has issued an open letter calling for the relaxation of non-pharmaceutical interventions for children in B.C. schools. (Nathan Denette/The Canadian Press)
Group of B.C. teachers calls for easing of pandemic measures for students

Teacher group says ‘response to COVID is out of balance to the cost our youth are paying’

Adam Hamdan has been living in Christina Lake since November 2020. Photo: Laurie Tritschler
Man acquitted on terrorist charges given temporary residence in Canada

Adam Hamdan had been facing deportation to Jordan, where he holds citizenship through his Palestinian parents

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read