Mutual funds help boost Canadians’ net worth in Q1

Financial assets, particularly mutual funds, boosted households’ net worth in Q1 2017, reveals StatsCanada in its national balance sheet and financial flow accounts.

Household sector net worth at market value rose 2.2% in the first quarter to $10,533.6 billion. On a per capita basis, household net worth was $287,700.

StatsCan reports that the leading contributor to the rise in households’ net worth was an increase in financial assets — again, mainly mutual funds — which “reflected continued strength in international and domestic equity markets.”

Read: Embedded commissions bans apply to 13% of global mutual fund assets: IFIC

Non-financial assets grew 1.7%, representing a 7.7% gain over the previous year. That increase reflects the strength of the Canadian real estate market, says StatsCan.

Household debt remains high

However, that same strong real estate market results in increased mortgage debt. Though the amount Canadians owe compared with their income ticked lower in the first quarter, it remained near record levels, thanks to mortgage debt.

Statistics Canada says the amount of household credit market debt as a proportion of household disposable income slipped to 166.9% in the quarter compared with 167.2% in the fourth quarter of last year.

That means that for every dollar of disposable income, Canadians owe about $1.67 in debt.

Mortgage debt represented 65.7% of the total, up from 65.6% at the end of 2016.

Read: Average payments on new mortgages climbing faster than inflation

Some experts have warned that Canadians are carrying too much debt and could be exposed in the event of a recession.

Read: Is housing exposure a risk for portfolios?

The Bank of Canada has also repeatedly issued warnings about the steady climb of household debt.

Read the full StatsCan report.

Also read:

BoC review highlights hot housing, cyber attacks, liquidity

Home equity loans put clients and economy at risk, says FCAC