Household debt burden eases in Canada ahead of steep rate hikes
BNN Bloomberg
Surging disposable income in Canada outpaced debt growth in the first quarter, bringing the nation’s household debt-to-income ratio down from record highs.
Household credit market debt as a proportion of disposable income dropped to 182.5 per cent, from a record 185 per cent in the final quarter of 2021, Statistics Canada reported Monday. Household debt grew 2 per cent, compared with a 3.3 per cent gain in disposable income in the first three months of the year. Net worth rose 2.6 per cent to $17.6 trillion (US$13.7 trillion).
The data suggest Canadians were in better financial shape to handle higher interest rates at the beginning of the year, supported by strong income and real-estate gains. The national balance sheet report is likely to reassure the Bank of Canada that households can withstand further increases, with markets expecting a third consecutive half-point hike next month.
