Credit market debt as a proportion of household disposable income continues to increase in Canada but at a slower pace, according to a report released on Friday by Statistics Canada.

The federal agency said household credit market debt (consumer credit, and mortgage and non-mortgage loans) totalled $2,166.0 billion in the second quarter. Mortgage debt reached $1,415.5 billion, while consumer credit stood at $642.4 billion.

“Credit market debt as a proportion of household disposable income (adjusted to exclude pension entitlements) increased to 169.1 per cent, as credit market debt outpaced income. In other words, there was $1.69 in credit market debt for every dollar of household disposable income. On a year-over-year basis, the household credit market debt to disposable income ratio declined 0.4 per cent. Similarly, the growth in the value of total credit market debt has been steadily declining.”

The federal agency said total credit market borrowing slowed for the second consecutive quarter as households borrowed $19.6 billion, down from $22.2 billion in the previous quarter. While consumer credit increased (+$1.7 billion), this was more than offset by a decline in both mortgage (-$3.6 billion) and non-mortgage (-$0.8 billion) loans.

“The seasonally adjusted household debt service ratio, measured as total obligated payments of principal and interest as a proportion of household disposable income for mortgage and non-mortgage debt, reached 14.2 per cent in the second quarter. Meanwhile, interest payments on mortgage debt continued to outpace principal payments,” said StatsCan.

“Net worth of the household sector rose 1.1 per cent in the second quarter to $11,058.0 billion. Overall, the debt to asset ratio remained relatively unchanged as growth in assets narrowly outpaced growth in liabilities.

“The value of non-financial assets rose $43.1 billion in the second quarter, mainly due to growth in the value of residential real estate, which reached $5,209.8 billion. Growth in the value of residential real estate has proceeded at a slower pace over the last five quarters due to more moderate housing resale prices.”

Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.

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