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Canada: Household Indebtedness Moderated in Q4

ByThe National Bank of Canada
Published 03/18/2012, 02:33 AM
Updated 05/14/2017, 06:45 AM
IMOB
-0.80%

According to data released today by Statistics Canada, after seasonal adjustment, Canadian households increased their debt at a lower rate than their disposable income in Q4. As today’s Hot Chart shows, the closely watched credit-market-debt-to-disposable-income ratio declined 1.3 percentage points to 150.6%, the largest drop since Q12008. Is this the beginning of a trend? It remains to be seen as the seasonally adjusted outstanding of household credit in chartered banks, credit unions and securitized assets increased 0.7% m/m in January. Also, according to data published today by the Canadian Real Estate Association (CREA), the seasonally adjusted value of existing home sale transactions in the MLS system increased 1% in January and February compared to Q4. So, the pause in Canadian household indebtedness could be temporary. Is this worrisome? As the left panel shows, the debt that Canadian households took in the recent years mostly financed real estate assets whose value proved resilient in contrast to what occurred in the U.S.
Canada Households indebtedness moderated in Q4

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