Canadian households rack up record mortgage debt amid low interest, high prices: StatsCan

OTTAWA – Canadian households have accumulated a record amount of mortgage debt for the second consecutive quarter amid low interest rates and high house prices, Statistics Canada said on Friday.

Boiling real estate markets in many regions helped propel house prices up, pushing mortgage demand to $ 34.9 billion in the fourth quarter of 2020, breaking the previous record of $ 28.7 billion. dollars established in the third quarter, the agency said.

Growth in the value of real estate has also pushed up homeowners’ net worth, according to Statistics Canada.

Residential real estate rose 3.3% in value, the second consecutive quarter of strong growth, as investment in new and existing homes remained robust, the agency said in its statement.

Overall national net worth rose to $ 357,955, from $ 343,172 per capita, and by the end of 2020, net worth had grown by more than $ 1 trillion since the end of 2019, StatCan said.

At the same time, debt service and debt-to-income ratios increased in the fourth quarter, but remained below pre-pandemic levels.

The household debt service ratio – measured by the total obligatory payments of principal and interest on credit market debt as a proportion of disposable household income – fell from 13.18% to 13.58%, Statistics Canada said in its press release.

Still, the ratio was 9.8% lower than its peak in the third quarter of 2019, the statement said.

Household debt as a share of income fell from 170.8% to 175%, as debt edged up while household disposable income declined slightly, the agency said.

In other words, Canadians owed $ 1.75 for every dollar of disposable household income, up from $ 1.71 in the third quarter, but still below the $ 1.81 recorded by Statistics Canada in the last quarter. end of 2019.

Canadians continued on a strong savings streak, marking the third consecutive quarter of double-digit savings rates, according to Statistics Canada.

“The Canadian economy has continued to recover, albeit at a slower pace, as households and businesses have continued to adjust to the realities of the COVID-19 pandemic,” the statement said.

“Canadians have further reduced their reliance on government supports as employee compensation regained lost ground. “

Yet even though government transfers and subsidies continued to decline, declining for a second consecutive quarter, they still supported household savings and helped keep the savings rate high, the statement said.

Rising financial wealth helped Canadian equity markets recoup their losses from the market panic earlier in 2020, as Canadians looked for places to keep their excess savings, the agency said.

Meanwhile, the federal government continued to replace short-term debt with longer-term securities, issuing a record amount of bonds in the quarter, according to Statistics Canada.

Canada’s aggregate national net worth, the sum of national wealth and Canada’s net international investment position, increased $ 602.9 billion from the previous quarter to $ 13,776.7 billion in the fourth quarter.

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