Canadian dollar coins or loonies are pictured in North Vancouver, B.C. Wednesday, May 29, 2019. Statistics Canada says Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter. THE CANADIAN PRESS/Jonathan Hayward

Canadian dollar coins or loonies are pictured in North Vancouver, B.C. Wednesday, May 29, 2019. Statistics Canada says Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter. THE CANADIAN PRESS/Jonathan Hayward

Household debt now $1.77 for every $1 in disposable income, StatCan says

The ratio was still below the $1.81 seen in the fourth quarter of 2019

Canadian households owed an average of $1.71 for every dollar of disposable income in the third quarter, Statistics Canada said on Friday.

In other words, Statistics Canada said, household debt as a percentage of disposable income rose to 170.7 per cent in the third quarter, up from 162.8 per cent in the second quarter.

The ratio was still below the $1.81 seen in the fourth quarter of 2019.

“With more cash and less spending, households were able to pay down some consumer debt. And while there has been a recent pickup, it remains below levels seen earlier this year,” said a client note by Priscilla Thiagamoorthy, economist at BMO Capital Markets.

Statistics Canada’s report said that while credit market debt rose by 1.6 per cent in the third quarter, household disposable incomes fell 3.1 per cent as Canadians recovered from job losses during the COVID-19 pandemic. Lower income households tended to have a higher debt to disposable income ratio, the agency has said.

While employment got within 3.7 per cent of its pre-pandemic levels during the quarter, it wasn’t enough to offset the wind-down of government supports, as employment insurance benefits dropped almost 50 per cent in the quarter, the report said.

But with COVID-19 restrictions keeping people close to home, household savings remained high during the quarter at $56.8 billion, down from a record of $90.1 billion in the second quarter, the agency said.

Households also benefited from rebounding mutual fund shares, amid a 3.9 per cent return on the Toronto Stock Exchange over the three-month period. Overall, the net worth of Canadian households rose three per cent to more than $12.3 trillion.

“Wealth distribution tends to be highly unequal across income groups, as a result, recent gains in net worth have disproportionally benefited Canadians who were already better off,” Ksenia Bushmeneva, an economist at TD Economics, in a note to clients about the household wealth report.

“Generally speaking, wealthier individuals experienced larger increases in savings as they were more likely to retain their jobs while also cutting back on discretionary spending such as travel and restaurants which remain largely unavailable.”

Meanwhile, there was a record rise in mortgage borrowing and housing investment hit its highest point on record as the cost of borrowing hovered at all-time lows, StatCan reported. Mortgage debt hit nearly $1.63 trillion as demand for mortgage loans rose to a new high of $28.7 billion.

“Clearly, cash is not always king, and having wealth — (whether) it’s financial or real estate assets — has really paid off this year with equities and real estate prices rallying,” wrote Bushmeneva.

Other key changes tracked in the report included household debt service ratio, which measures how much income goes to paying interest and principal. The household debt service ratio increased to 13.22 per cent from 12.36 per cent, after declining earlier in the year amid debt deferral programs tied to the COVID-19 pandemic. Many of these programs wound down at the end of the third quarter, Statistics Canada said.

“Canadian household finances are in better health this year thanks mainly to unprecedented government transfers which lifted overall incomes,” wrote Thiagamoorthy.

This report by The Canadian Press was first published Dec. 11, 2020.

Anita Balakrishnan, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
253 new COVID-19 cases, 4 more deaths in Interior Health over the weekend

More than 1,000 cases in the region remain active

The bus shelter across from the police detachment is one of ten smashed Jan. 17. (Monique Tamminga)
Glass smashed out of 10 bus shelters in Penticton

One of the bus shelters is right across from the RCMP detachment

This is the location, 3240 Skaha Lake Road, of where BC Housing plans to build a four storey supportive housing project for the homeless and at risk of being homeless. (Jesse Day Western News)
Penticton mayor and MLA concerned about new homeless housing

BC Housing is holding a virtual info meeting Tuesday evening, Jan. 19

Corsac the cat is up for adoption at Critteraid.
Critteraid hosts three adoption Sundays

More than 40 cats looking for their forever homes

Abigail McCluskey is in the Netherlands training to compete in the World Cup next month. She joins 12 Canadian speedskaters for the international competition later this month. (Dave Holland CSI Calgary)
Penticton speed skater in Netherlands for World Cup

Abigail McCluskey will be skating the long track in the international competition

Syringe is prepared with one of B.C.’s first vials of Pfizer vaccine to prevent COVID-19, Victoria, Dec. 22, 2020. (B.C. government)
B.C.’s COVID-19 caseload stays steady with 465 more Tuesday

No new outbreaks in health care facilities, 12 more deaths

Penticton paramedics took about 70 per cent more calls for drug overdoses in 2020 compared to 2019, Interior Health representatives told Penticton council Tuesday, Dec. 8, 2020. ((Jesse Day - Western News)
Penticton seeks $300K grant to help address opioid crisis

The grant would provide $100K a year over three years to a Community Action Team

Kevin Lee Barrett is charged with attempted murder and aggravated assault. (Facebook)
‘Just a blood bath’: Woman recounts finding victim during West Kelowna attempted murder trial

Kevin Barrett is charged with attempting to kill his mother, leaving her on a forest service road in April 2019

(Jen Zielinski - Black Press Media)
Man arrested after hours-long standoff in Kelowna

RCMP surrounded a home on Leathead Road, Monday night

Cranbrook Food Bank coordinator Deanna Kemperman, Potluck Cafe Society executive director Naved Noorani and Sunshine Coast Community Services Society executive director Catherine Leach join B.C.’s new Municipal Affairs Minister Josie Osborne on a video call about B.C. gaming grants, Jan. 19, 2021. (B.C. government)
B.C. gaming grants reorganized for COVID-19 priorities

Minister highlights community kitchens, food banks

(Pixabay photo)
‘Cocaine bananas’ arrive at Kelowna grocery stores after mix up from Colombia: RCMP

Kelowna RCMP recently concluded an international drug investigation after finding cocaine in local grocers’ banana shipments in 2019

A new video from NCCIH and BC Northern Health titled ‘Healing in Pandemic Times: Indigenous Peoples, Stigma and COVID-19’ was animated by Joanne Gervais. (Photo Provided By: NCCIH Archives)
VIDEO: Stigma against Indigenous people is a ‘social sickness’

A new short animated video is aiming to educate the public on the stigmatization

A pinniped was attacked by an unseen predator off the shores of Dallas Road Monday night. (Courtesy of Steffani Cameron)
VIDEO: Seal hunting, not being hunted in video shot off Victoria waterfront

Victoria woman captures footage of pinniped activity off Dallas Road

Cody Younker, Revelstoke city councillor. (Jocelyn Doll/Revelstoke Review)
Revelstoke councillor accused of sexually abusing Langley teen while school chaperone

Civic lawsuit alleges Cody Younker sexually abused student while volunteering on school trips

Most Read