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

Mark Chandler, outside of his extradition hearing at the Vancouver Supreme Court. (Langley Advance Times files)
Langley condo builder’s fraud sentencing in U.S. delayed due to COVID-19

Mark Chandler’s own lawyer contracted COVID-19 in December

People have noticed pine siskins dying in the area, part of a trend of larger numbers of the finch flocking to the area about every five years. The larger numbers result in crowding and increased spread of salmonella. (Wikipedia photo)
Langley birdwatchers seeing dead finch species in higher numbers

Pine siskins are in the area in larger numbers. They are prone to salmonella which is fatal for them

Electric charging stations, like this one outside the new North Delta Centre for the Arts, might be seeing more commercial delivery vehicles using them soon, if a provincial rebate program takes off. (James Smith photo/Special to Black Press Media)
Restaurants to get big rebates for electric delivery vehicles

The project boosts the rebates for electric commercial and industrial vehicles in B.C.

Langley Thunder (Black Press Media files)
Langley Thunder trades for Maple Ridge’s Cody Malawsky

BC Junior A Lacrosse League draft was held remotely on Thursday, Jan. 14

A woman uses her computer keyboard to type while surfing the internet in North Vancouver, B.C. THE CANADIAN PRESS/Jonathan Hayward
Township of Langley says coding matters

Registration open for virtual codathon hosted in conjunction with the Intelligent Community Forum

Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry head for the press theatre at the B.C. legislature for an update on COVID-19, Jan. 7, 2021. (B.C. government)
B.C.’s COVID-19 spread steady with 509 new cases Friday

Hospitalized and critical care cases decline, nine deaths

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Seasonal influenza vaccine is administered starting each fall in B.C. and around the world. (Langley Advance Times)
After 30,000 tests, influenza virually nowhere to be found in B.C.

COVID-19 precautions have eliminated seasonal infection

Prime Minister Justin Trudeau listens to a question during a news conference outside Rideau cottage in Ottawa, Friday, January 8, 2021. THE CANADIAN PRESS/Adrian Wyld
Trudeau says Canada’s COVID vaccine plan on track despite Pfizer cutting back deliveries

Canadian officials say country will still likely receive four million doses by the end of March

Jobs Minister Ravi Kahlon shared a handwritten note his son received on Jan. 13, 2021. (Ravi Kahlon/Twitter)
Proud dad moment: B.C. minister’s son, 10, receives handwritten note for act of kindness

North Delta MLA took to Twitter to share a letter his son received from a new kid at school

Lilly and Poppy, two cats owned by Kalmar Cat Hotel ownder Donna Goodenough, both have cerebellAr hypoplasia, a genetic neurological condition that affects their ability to control their muscles and bones. Photo by Alistair Taylor – Campbell River Mirror
VIDEO: Wobbly Cats a riot of flailing legs and paws but bundles of love and joy to their owner

Woman urges others to not fear adopting cats with disabilities

Chief public health officer Dr. Theresa Tam provides an update on the COVID-19 pandemic in Ottawa on Friday, Jan. 8, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada’s top doctor says to avoid non-essential travel as B.C. explores legal options

Premier John Horgan says he is seeking legal advice on whether it can limit interprovincial travel

The Delta Hospice Society operates the Harold & Veronica Savage Centre for Supportive Care (pictured) and the Irene Thomas Hospice in Ladner. (The Canadian Press photo)
Fraser Health to evict Delta Hospice Society, open new hospice beds next door

Health authority will serve DHS 30 days’ notice when service agreement expires Feb. 25

Martin Luther King Jr. addresses the crowd during the march on Washington, D.C., in August of 1963. Courtesy photo
Government reinforces importance of anti-racism act on Black Shirt Day

B.C. Ministers say education “a powerful tool” in the fight for equity and equality

Most Read