Statistics Canada says the amount Canadian households owe relative to their income fell in the third quarter as a rise in disposable income outpaced the growth in debt.
It was the sixth consecutive quarter that the measure declined.
The agency says the ratio of household credit market debt as a proportion of household disposable income in the third quarter fell to 173.1% on a seasonally adjusted basis, down from 175.3% in the second quarter.
In other words, Statistics Canada says there was $1.73 in credit market debt for every dollar of household disposable income.
The move came as the household debt service ratio — measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income — fell to 14.72% in the third quarter compared with 14.98% in the second quarter.
Although the ratio declined, it was a very small improvement, Desjardins economic analyst L.J. Valencia said in a note on Wednesday.
“While households were wealthier in Q3, today’s household balance sheet data isn’t exactly good news,” he wrote. “Canadian households continue to struggle with high interest rates and costly mortgage payments. The impending mortgage renewal wall next year is a significant concern as more households could face greater financial strain because of higher monthly payments.”
Households are bracing for those higher payments by increasing their savings to 7.1%, he added, even as consumption rose during the third quarter.
Debt payments rose 0.2% for the quarter as disposable income gained 2%.
Overall, net wealth rose 1.7% for the period as Valencia noted gains in equities more than offset a modest decline in the value of housing and increased borrowing among Canadian households.