The national balance sheet and financial flow accounts released on Monday found that the ratio of credit market debt to disposable income rose to 181.66 in the second quarter, up from 179.71 in the previous quarter. That means the average Canadian owed nearly $1.82 for every dollar of disposable income.
“TRIFECT OF MARKET CHALLENGES”
Statistics Canada said the total net worth of the household sector fell by $990.1 billion, or 6.1 per cent, to $15.2 trillion. That marked the biggest decline on record as individuals faced a “twitchy market challenge,” with weaker housing, stock and bond markets weighing on Canadians’ wallets. The total value of household financial assets fell by $530.6 billion.
MORTGAGE REQUIREMENT
Credit market lending accelerated from the first quarter as demand for mortgages remained strong. Canadians added “a near-record $56.3 billion in debt in the second quarter,” and mortgages were the biggest contributor, with $48.7 billion in demand. Statistics Canada also found that fewer Canadians were leaning toward variable rate borrowing for their mortgage in the current interest rate environment. “Floating-rate lending accounted for more than half (51.1%) of new funds raised against fixed-rate alternatives in the second quarter, but by June this share was lower,” Statistics Canada reports in exhibition. That drop in floating-rate lending came shortly after the Bank of Canada raised rates again and warned it may act “more forcefully” to bring inflation under control. Since the June hike, the central bank has raised interest rates two more times. By the end of the second quarter, variable-rate mortgages accounted for about a third (32.5 percent) of outstanding mortgage debt, up from 29.8 percent in the first quarter.
