Canadians are falling deeper into debt: Statistics Canada

  9/12/2022 |   SHARE
Posted in Canada Living by Eileen Farrow | Back to Main Blog Page

Debt Payment

New data from Statistics Canada shows that Canadians are sliding deeper into debt.

The national balance sheet and financial flow accounts released Monday, found the credit market debt to disposable income ratio climbed to 181.66 in the second quarter, which is up from 179.71 the previous quarter.

This means the average Canadian owed $1.82 for every dollar of disposable income.

‘TRIFECTA OF MARKET CHALLENGES’

Statistics Canada reported overall household sector net worth fell $990.1 billion, or 6.1 per cent, to $15,215.3 billion.

This marked the largest decline on record as individuals faced a “trifecta of market challenges,” with weaker housing, equity and bond markets weighing on Canadians’ wallets.

The total value of households’ financial assets fell by a record $530.6 billion.

DEMAND FOR MORTGAGES

Credit market borrowing accelerated from the first quarter as demand for mortgages remained high.

Canadians added “a near record $56.3 billion of debt in the second quarter” and mortgages were the largest contributor, with demand of $48.7 billion.

Statistics Canada also found fewer Canadians were leaning towards variable rate borrowing for their mortgage in the current interest rate environment.

“Variable rate borrowing represented over half (51.1%) of new funds advanced versus fixed rate alternatives in the second quarter, but by June this share was trending lower,” Statistics Canada outlined in the report.

This drop in variable rate borrowing comes right after the Bank of Canada delivered another interest rate hike and warned it may act “more forcefully” to get inflation under control.

By the end of the second quarter, variable rate mortgages represented about a third (32.5 per cent) of outstanding mortgage debt, which is up from 29.8 per cent in the first quarter.

Source: BNN Bloomberg



Bank of Canada Benchmark Rate, Canadian Debt, Household Debt, NonMortgage Debt, Variable Rate Mortgages



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