Debt-to-disposable income ratio rises to 182%, StatsCan says

Statistics Canada says the amount Canadians owe relative to their income moved higher in the second quarter as the level of debt grew faster than their earnings.

The agency says household credit market debt as a proportion of household disposable income rose to 181.7 per cent on a seasonally adjusted basis in the second quarter, up from 179.7 per cent in the first quarter.

In other words, there was about $1.82 in credit market debt for every dollar of household disposable income in the second quarter.

The increase came as households' disposable income increased 1.0 per cent, but household credit market debt rose 2.1 per cent.

Statistics Canada says, on a seasonally adjusted basis, households added $56.3 billion of debt in the second quarter including $48.7 billion in mortgages.

Debt loads have been increasing for a while now, but for the most part asset values were increasing by more, making it so that household net worth was increasing.

That trend changed direction during the quarter, however, as household wealth fell by 6.1 per cent in the second quarter. That's the steepest decline on record since data tracking began in 1990.

The value of financial assets fell by 5.7 per cent while the value of non-financial assets such as residential real estate fell by 5 per cent.

"Today's release revealed that households faced rising financial headwinds in the second quarter," TD Bank economist Ksenia Bushmeneva said of the numbers. "The selloff in financial markets earlier this year combined with a decline in house prices manifested in the largest drop in household wealth on record."