Canadian household debt increasing


According to a brand new study from Statistics Canada, Canadian household debt and income to asset ratios are trending in opposite directions, and this is a bad sign for consumers.

According to the report, Canadians as a whole have become more indebted over the last few decades. That said, net worths have gone up and outpaced indebtedness as a result of rising property values overall. This has contributed to rising indebtedness, with many Canadians now able to borrow against that equity appreciation.

The total debt-to-income levels—measured on an after-tax basis—and net worth increased for all major Canadian cities across all income groups between 1999 and 2016.

As you will likely have guessed, indebtedness is more prominent in Toronto and Vancouver, where debt-to-income ratios sit at 210% and 230% respectively. Whereas in eastern cities such as Moncton and Fredericton, that ratio drops to about 100%.

Source: Statistics Canada

Source: Statistics Canada

Net worth is also higher in Toronto and Vancouver, which isn’t surprising given the higher value of real estate in these cities.

For Canada as a whole, median net worth increased fom $144,500 in 1999 to $295,100 in 2016. During this period, net worth in Toronto rose 121% to $365,100, and in Vancouver it rose by 188% to $434,400. It is also worth noting that based on the same data, 8.4% of families in Canada had less than $500 in net worth.

Glenn Carter