Posts Tagged "household"

The Bank of Canada said high household debt and imbalances in the housing market remain key vulnerabilities in the Canadian economy.

In its annual financial system review released Thursday, the central bank identified the main factors that could have negative consequences for the economy, while painting an overall picture of a stable financial system.

Bank of Canada governor Stephen Poloz said that progress has been made to address both issues.

“New measures have curbed borrowing, reduced speculative behaviour in housing markets and made the financial system more resilient,” he said in the report.

“While the fundamentals in the housing sector remain solid overall, and the sector should return to growth later this year, we continue to monitor these vulnerabilities closely.”

Bank of Canada Governor Stephen Poloz waits to appear before the Standing Committee on Finance in Ottawa, Tuesday April 30, 2019. (Adrian Wyld/The Canadian Press)

For the first time, the bank also identified climate change as a possible threat to the economy

“We want to better understand the risks that climate change poses to the economy and financial system,” the report said. It said the Bank of Canada will begin “a multi-year research effort,” as well as collaborate with domestic and international partners to build the bank’s capacity to analyze climate risks.


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Statistics Canada says the amount Canadians owe relative to their income ticked higher in the fourth quarter of last year as the growth in debt slightly outpaced income growth.

The agency says that seasonally adjusted household credit market debt, as a proportion of disposable income, increased to 178.5 per cent in the fourth quarter. That compared with a revised reading of 178.3 per cent in the third quarter.

That means there was roughly $1.79 in credit market debt for every dollar of household disposable income.

Credit market debt, which includes consumer credit and mortgage and non-mortgage loans, totalled nearly $2.21 trillion in the fourth quarter.

Mortgage debt reached nearly $1.44 trillion, while consumer credit and non-mortgage loans combined to total $769.4 billion.

The household debt service ratio, the total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, increased to 14.9 per cent in the quarter compared with revised reading of 14.7 per cent in the third quarter.


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