UPDATE 1-Canadian household debt-to-income rises to record in Q3

Mon Dec 14, 2015 8:35am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Adds details from report)

OTTAWA Dec 14 (Reuters) - Canadian household debt compared to income rose to a record in the third quarter as the rate of borrowing outpaced growth in disposable income, data from Statistics Canada showed on Monday.

The ratio of household credit market debt to income rose to 163.7 percent in the third quarter from a downwardly revised 162.7 percent. It was the second quarter in a row that the measure has increased.

Household credit market debt, which includes consumer credit, mortgages and other loans, rose 1.4 percent with the bigger increase coming from mortgages.

Still, it was cheaper for Canadians to carry their loans, with the interest-only debt service ratio reaching a record low of 6.1 percent.

The Bank of Canada, which has cut interest rates twice this year to offset the shock of cheap oil on the economy, has warned of rising vulnerabilities in the household sector as Canadians have taken advantage of years of low borrowing costs.

The high debt levels have led some to worry that consumers have taken on more than they can handle, particularly in the housing market where prices have soared. The Canadian government took steps last week to cool parts of the housing market by forcing people who want to buy more expensive homes to provide a bigger down payment.

Overall, national net worth fell 1.3 percent to C$9.49 trillion ($6.89 trillion) as the value of Canada's natural resource wealth fell alongside energy prices.

($1 = $1.3771 Canadian)

(Reporting by Leah Schnurr; Editing by Bill Trott)