The ratio of household debt to income has increased in Canada

The ratio of household debt to income has increased in Canada


Canadians' debt levels have risen faster than their incomes, according to Statistics Canada data released on Monday. 

Household debt on the credit market as a share of household disposable income reached 181.7% in the second quarter of 2022, after reaching 179.7% in the previous quarter.

In other words, there was $1.82 of credit market debt for every dollar of household disposable income in the second quarter. “Although household disposable income was higher (+1%) during the second quarter, the increase was overtaken by higher growth in household credit market debt (+2.1%)” , noted Statistics Canada.

Borrowing is nearing a record pace

According to Statistics Canada, on a seasonally adjusted basis, the pace of borrowing on the credit market accelerated in a “near-record” fashion compared to the first quarter. Households added $56.3 billion to debt in the second quarter.

In comparison, households borrowed a record $61.6 billion in the same quarter of 2021.

Mortgage lending continued to be the main driver of increased borrowing in the markets in the second quarter of 2022, with demand at $48.7 billion. Demand for non-mortgage loans recorded two consecutive quarters of activity (+$8.3 billion in the first quarter and +$7.7 billion in the second quarter), “which had not been observed since the early 2018,” according to the federal agency.