OTTAWA (Reuters) - Canadian household debt as a share of income hit a record high in the second quarter, Statistics Canada data showed on Thursday in a report likely to reinforce concerns of overborrowing by consumers.
The ratio of household credit market debt to disposable income rose to 167.6 percent in the second quarter from 165.2 percent in the previous quarter. That means Canadians had C$1.68 ($1.27) of debt for every dollar of disposable income.
Household credit market debt, which includes consumer credit and mortgage and non-mortgage loans, rose 2 percent in the quarter, easily outpacing growth in disposable income of just 0.5 percent.
Years of low interest rates since the financial crisis have seen Canadians take on more debt, largely due to rising home prices.
Consumers borrowed a seasonally adjusted C$29.2 billion in the second quarter, an increase of C$3.5 billion from the previous quarter. Mortgages accounted for C$19.1 billion of that, up from C$18.4 billion, while other types of debt stood at C$10.1 billion, up from C$7.3 billion.
The Bank of Canada has flagged the high level of debt as a potential vulnerability for the financial system. A central bank official said earlier this month that the amount of debt compared with income was starting to get disturbing.
But higher home prices drove a 1.9 percent increase in Canadians’ net worth in the second quarter. On a per capita basis, household net worth was C$271,300, up from C$266,900 in the first quarter.
Reporting by Leah Schnurr Editing by W Simon