Canada household debt-to-income ratio hits a record high
OTTAWA (Reuters) - Canada's household debt-to-income ratio hit a record high in the third quarter of 2014, climbing to 162.6 percent from 161.5 percent in the second quarter, Statistics Canada said on Monday.
The previous high was 161.7 percent recorded in the third quarter of 2013. Statscan revised that figure down from an initial 164.1 percent and also cut the ratio for the second quarter of 2014 down from an initial 163.6 percent.
Statistics Canada revised lower all of the quarterly figures the debt-to-income ratio from the first quarter of 2011 to the second quarter of 2014 to reflect the fact that household mortgages had less value than first estimated.
The Bank of Canada, which like the federal government worries about people taking on too much debt, watches the ratio closely for signs consumers may be overextended. The ratio is not seasonally adjusted.
Bank of Canada Governor Stephen Poloz told Reuters earlier this month that household imbalances, caused by high levels of debt and a hot housing market, should gradually ease as the economy strengthens.
The ability of households to service their debt has improved as interest rates stay low. The debt-service ratio, or interest paid as a proportion of disposable income, fell to a record low 6.8 percent in the third quarter.
National net worth rose 2.8 percent from the second quarter to hit C$8.12 trillion ($7.00 trillion).
(Reporting by David Ljunggren; Editing by Jeffrey Benkoe)
© Thomson Reuters 2017 All rights reserved.