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Canadian Household Balance Sheet (2024 Q1)

Marc Ercolao, Economist 

Date Published: June 13, 2024

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Canadian households' wealth rises, but debt-servicing remains elevated  

  • Canadian household net worth (the value of assets less liabilities) started the year on a positive note, rising by $548 billion or 3.3% quarter-on-quarter (q/q) to $16.9 trillion in the first quarter of 2024. 
  • Financial assets advanced by 3.6% q/q on the back of solid equity market gains, setting a new record high of $9.7 billion. 
  • After two consecutive quarterly declines, the value of residential real estate rose to $213 billion or 2.6% q/q in the first quarter.
  • Household's have dramatically reined in borrowing in response to higher interest rates. Liabilities expanded by a small 0.3% q/q, the slowest quarterly expansion since Q1-2023.
  • Income outpaced the tepid growth in debt, pushing the household debt-to-income ratio down to 176.4%. This represents the fourth consecutive quarterly decline in the ratio, putting it at its lowest level since Q1-2021. 
  • The debt service ratio –total household debt payments relative to personal disposable income – fell slightly to 15.0% from 14.9% in Q4, in line with 2019 levels, but a percentage point above 2010–2018 levels.

Key Implications

  • Financial market strength combined with slower growth in mortgage debt delivered a boost to Canadian households' wealth. Despite the slight pull back in the debt-servicing burden, it remains near record highs, as payments and incomes are rising in tandem. Q1 GDP highlighted that although economic growth is moderating, wealth gains appear to be buoying consumer spending, with particular strength coming through on the household side on the first quarter reading. 
  • Looking ahead, we expect another quarter of growth in household net worth. First, we expect home prices to rise over the coming quarters as financial conditions and mortgage rates slowly ease. Likewise, equities have propelled higher in the second quarter on the back of strong economic performance stateside and the anticipation of the Fed cutting cycle. On the flip side, lower rates will slowly reignite borrowing activity, putting further pressure on Canadian households' finances.

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