By Ketki Saxena
Investing.com -- In the first quarter of this year, Statistics Canada reported an increase in household debt levels relative to disposable income. This rise is attributed to a decline in disposable income while Canadians continue to accumulate more debt.
Data from the agency reveals that seasonally adjusted household credit market debt as a proportion of disposable income increased to 184.5% during Q1, up from 181.7% in Q4 of 2022.
This indicates that for every dollar of household disposable income, there was $1.85 worth of credit market debt.
Meanwhile, the household debt service ratio climbed to 14.90% in Q1 from 14.40% in the previous quarter. This data point represents the principal and interest payments on credit market debts as a percentage of disposable income, meaning that Canadians now owe nearly 15% of their disposable.
This surge can be partly explained by households borrowing an additional $16.5 billion (seasonally adjusted) during Q1, with mortgage debts accounting for $11.2 billion of this amount.
The overall seasonally adjusted stockpile of household credit market debts - encompassing consumer credits along with mortgage and non-mortgage loans - experienced a growth rate of approximately 0.6%. The total figure rose from the fourth quarter's level at around $2.84 trillion in Q3 including $2.11 trillion specifically related to mortgages. This data point represents the total amount owed by Canadians in credit market debt.