Statistics Canada has just released stats showing that one of the major things we’ve all been worried about is going the wrong way. It’s our household debt, and it’s climbing. For those ready to plunge into full-on panic though, take heart. Our household net worth is also on the rise, thanks to that red hot real estate market we’ve been seeing for the past several months.
We were all very happy when, in the first quarter of the year, we saw our household debt plunge to 162.1 per cent. But as it turns out, that celebration was short-lived because according to Stats Can, that household debt now sits at 163.4 per cent following that first quarter. That means that once again, Canadians owe just over $1.63 for every $1 that they earn.
Of the $25.9 billion that Canadians borrowed during the second quarter, the majority of it – $18 billion – was due to home loans. It’s a massive jump considering that the first quarter showed the lowest mortgage debt taken on in four years. After those first three months, mortgage borrowing only accounted for $3.8 billion of our household debt.
And there’s no doubt that the small boom we’ve seen since April has contributed to that number. That number seems quite high, and it is. The reason for the rush on the part of home buyers and homeowners to go get a mortgage is the fact that mortgage rates are climbing higher, and that’s led some to think that if they don’t get in now, they’ll be left out of the market in the coming quarters.
But there is good news to be found in the gloom. Because our household debt has risen, and so much so in mortgage borrowing alone, it also means that our household net worth has increased. During the second quarter that net worth rose by 0.7 per cent, and it was home values that led that gain with an increase of 1.6 per cent.
But what about the total tally, and not just the new debt that was taken on, or the homes that were newly purchased? The total mortgage debt in our country now equals $1.1 trillion, and consumer credit topped out at $500 billion at the end of the second quarter. Total household net worth on a per capita basis, according to Stats Can, sat at $205,900.
