The household debt-to-income ratio keeps rising in Canada

The latest report by Statistics Canada shows that the amount of debt Canadian households have relative to their income was up in the third quarter of 2022.

According to the agency, household credit market debt as a share of household disposable income went up from 182.6% in Q2 to 183.3% in Q3 on a seasonally adjusted basis.

It means that for every dollar of household disposable income Canadians owe $1.83 in credit market debt.

This increase is the result of households’ disposable income growth by 0.8% in the quarter and household credit market debt hike by 1.2%.

The report says the household debt service ratio, representing overall obligated payments of principal and interest on credit market debt as a share of household disposable income, was up from 13.46% in the second quarter to 13.97% in the third one.

The total household credit market debt, including consumer credit, mortgage, and non-mortgage loans, rose by 1.2% and almost reached $2.8 trillion in Q3. Mortgage debt accounted for $2.07, while non-mortgage loans totalled $722.6 billion.

We want to remind homeowners that before tapping into high interest debts, we suggest exploring all options associated with secured equity lending. We have some unique solutions and ideas from our lenders partners on how to use interest only mortgages and home equity lines of credit to navigate through the high interest rates environment and lower monthly payments.