Household debt rises in Q3 on higher borrowing

Household borrowing ramped up in the third quarter, according to the latest data from Statistics Canada, highlighting ongoing debt worries.

StatsCan reported that total borrowing increased to $28.5 billion in the third quarter, from $21.7 billion in the previous quarter.

Mortgage loan demand rose to $18.5 billion in the quarter. Consumer credit and other non-mortgage borrowing increased to $10.0 billion, StatsCan said.

With the growth in debt, the household debt service ratio rose from 14.82% to 14.96% in the third quarter, and the debt to income ratio ticked up to 175.9% from 175.4% in the previous quarter.

Commenting on the data, BMO Economics said “household debt burdens will remain a crucial vulnerability for the Canadian economy for some time.”

At the same time, StatsCan also reported that Canada’s national net worth was stable at $12.6 trillion in the third quarter. In particular, household net worth rose by $101.4 billion in the third quarter to $11.5 trillion.

The increase in household net worth was driven by an increase in financial assets, which rose by $88.1 billion in the quarter. Non-financial assets also rose by $50.0 billion in the quarter, primarily due to rising real estate values, StatsCan said.

The increase in assets outpaced the growth in financial liabilities, which were up by $36.7 billion in the quarter.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.