The ratio between debt and income in the third quarter is almost 178%


The amount of Canadian debts relative to their income is higher in the third quarter.

Statistics Canada says debt of households in the credit market as a share of disposable income in the third quarter on a seasonally adjusted basis of 177.5 percent. This is in comparison with 177.4 percent in the second quarter.

In other words, Canadians owed nearly $ 1.78 per debt to the credit market, which includes consumer loans and mortgage and non-mortgage loans for every dollar of household disposable income in the third quarter.

Total borrowing in the credit market slowed down for the third consecutive quarter, with households borrowing $ 18.3 billion, down $ 20.0 billion in the previous quarter.

Mortgages posted the third consecutive quarterly decline as they fell by $ 1.2 billion. Consumer credit demand also fell by $ 500 million, while fixed loans fell by $ 100 million.

The indebtedness rate of households, measured as the total obligation to pay principal and interest as a share of disposable income, was 14.5 percent in the third quarter, which is relatively unchanged compared to the previous quarter.

The Canadian debt burden is becoming more and more partly financed because Bank of Canada has raised the reference rate five times since the summer of 2017. The next decision by the central bank on interest rates is due on 9 January. The markets currently think there is an around 10% chance of raising rates on that day.


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