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

.
Princeton’s Spotlight wins two provincial awards for excellence

Publisher takes first place for investigative reporting

Princeton GSAR responds 24 hours a day, 365 days a year. In 2020 the crew was called out 34 times, and members spent 721 hours on calls, and 683 hours training. Photo Princeton GSAR Facebook
Teen missing in Manning Park found after 24 hours

Young man spends night on mountain and survives with just a few scrapes

The COVID-19 cases reported over the week of May 30 to June 5. (BC CDC)
South Okanagan sees second straight week of 17 new COVID-19 cases

Summerland, Keremeos and Princeton all recorded no new cases

The Regional District of Okanagan-Similkameen has hired a new FireSmart coordinator. (Black Press file photo)
FireSmart coordinator named for Regional District of Okanagan-Similkameen

Kerry Riess will provide assistance to mitigate potential wildfire hazards

The damages to the downtown park in Keremeos. One of the trees that was uprooted was a memorial tree with a plaque. (Submitted)
Memorial tree in Keremeos park uprooted by vandals

All of the trees in the small park were torn up and the statue was shifted

Dr. Albert de Villiers, chief medical health officer for the Interior Health Authority. (Contributed)
Black Press Media Weekly Roundup: Top headlines this week

Here’s a summary of this week’s biggest stories from the Okanagan-Shuswap

Unofficial holidays: Here’s what people are celebrating for the week of June 13 to 19

Flag Day, Garbage Man Day, International Panic Day all coming up this week

57-year-old Kathleen Richardson was discovered deceased in her home Wednesday, June 9, 2021. Her death is considered a homicide and connected to the slain brothers found on a Naramata forest road. (Submitted)
Naramata community in shock as condolences pour in for homicide victim Kathy Richardson

Richardson was well liked in the community, a volunteer firefighter with a home-based salon

British Columbia-Yukon Community News Association’s 2021 Ma Murray Awards were handed out during a virtual ceremony on Friday, June 10. (Screen grab)
Black Press Media winners take gold at B.C. and Yukon journalism awards

Publications received nods in dozens of categories

The RCMP are asking for assistance regarding the death of Kathleen Richardson of Naramata, pictured here. Her death is believed to be related to two homicides in Naramata in May. (RCMP)
Police identify South Okanagan homicide victim as 57-year-old Naramata woman

57-year-old Kathleen Richardson was discovered deceased in her home Wednesday

Fair-goers take a ride at the 120th annual Armstrong Interior Provincial Exhibition and Stampede Aug. 28-Sept. 1, 2019. (Katherine Peters - Morning Star)
Armstrong’s IPE not eligible for COVID-19 grant designed for major attractions

Shuswap MLA Greg Kyllo criticized the rigidity of the provincial program’s criteria

Two e-scooters parked on the sidewalk along Water Street in downtown Kelowna on Monday, May 3. Scooters parked on walkways are causing accessibility issues for some people with disabilities. (Michael Rodriguez/Capital News)
Kelowna General Hospital clinicians observe increase in e-scooter injuries

A report is set to go to city council next week on how the e-scooter pilot has gone thus far

Prime Minister Justin Trudeau greets campers while visiting McDougall, Ont. on Thursday, July 19, 2018. THE CANADIAN PRESS/Frank Gunn
71% of B.C. men say they’d prefer to go camping with Trudeau: survey

Most British Columbians with plans to go camping outdoors say they’d prefer to go with Trudeau or Shania Twain

Members of the Department of Fisheries and Oceans’ Marine Mammal Response Program rescued an adult humpback what that was entangled in commercial fishing gear in the waters off of Entrance Island on Thursday, June 10. (Photo courtesy Marine Mammal Response Program)
Rescuers free humpback ‘anchored’ down by prawn traps off Vancouver Island

Department of Fisheries and Oceans responders spend hours untangling whale

Most Read