Canadian household debt burdens in the third quarter rose for the first time in a year as borrowing picked up, but historical revisions show overall levels were lower than previously estimated.
Household credit market debt to disposable income ticked up to 175.9 per cent in the three months ended September, according to data released Friday by Statistics Canada. That’s up from a revised 175.4 per cent in the previous quarter. Debt grew at an annualized pace of 1.2 per cent in the quarter, outstripping a 0.9 per cent gain in incomes.
It’s a mixed picture for policy makers. The pick-up in debt-to-income reflects more demand for loans as housing markets recovered and interest rates fell, and won’t be welcome. But revisions suggest the burden wasn’t as large as initially thought and debt levels as a share of income are still below the record 178.5 per cent hit in the first quarter of 2017.
One consequence of the nation’s relatively high debt levels is the growing share of spending to service it. The debt service ratio hit 14.96 per cent in the third quarter, the highest on record.
Bank of Canada Governor Stephen Poloz has warned that elevated household debt levels are the economy’s biggest vulnerability, and one of the reasons he was reluctant to cut interest rates earlier this year.
Did You See This CB Softwares?
37 SOFTWARE TOOLS... FOR $27!?Join Affiliate Bots Right Away
The agency said upward revisions to income growth pushed the debt-to-income metric down from record highs earlier this year.