The agency said household credit market debt as a proportion of household disposable income increased to 167.8 per cent, up from 166.6 per cent in the first quarter. This meant that for every dollar of household disposable income, there was $1.68 in credit market debt.
The increase in the debt ratio came as household net worth on a per capita basis fell by $1,300 to $285,900. In the same time frame, household income increased 1.2 per cent, while household credit market debt rose 1.9 per cent.
“A decline in household net worth, albeit modest, alongside a sharp increase in consumer credit growth are notable as together they suggest that the ability of households to absorb higher interest rates continued to deteriorate,” RBC economist Laura Cooper wrote in a commentary, as quoted by The Canadian Press.
Overall household credit market debt, which includes consumer credit, mortgage and non-mortgage loans, totalled nearly $2.08 trillion in the second quarter. Mortgage debt increased 1.6 per cent to $1.36 trillion, while consumer credit grew 2.4 per cent to $609.6 billion.
TD economist Dina Ignjatovic cautioned that household indebtedness remains a key risk to the economic outlook.
“This is especially true in regions that are more sensitive to higher interest rates such as B.C. and Ontario, with the latter even more at risk given the recent turn in the housing market,” Ignjatovic said in a commentary.
“Going forward, the spending environment – for consumers, businesses and governments – will become more challenging in light of the recent interest rate hikes by the Bank of Canada,” she added. “With [more] hikes likely in the pipeline, there will be some further deterioration in the debt service ratio in the coming quarters.”
Millionaire cities attest to ever-growing househould – wealth -report
Commentary: irresponsible borrowing is not the problem
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
In its latest data release, Statistics Canada announced that the amount Canadians owed compared with their disposable income climbed higher in the second quarter.