(Ottawa) Statistics Canada reports that the amount of debt Canadians have relative to their income decreased slightly in the third quarter, but the cost of servicing that debt relative to income increased.
The agency says household credit market debt as a share of household disposable income in the third quarter fell to 181.6%, on a seasonally adjusted basis, down from 181.9% in the second quarter.
In other words, Canadians owed $1.82 in credit market debt for every dollar of household disposable income in the third quarter.
This result can be explained by the fact that household disposable income increased by 1.0%, while debt on the credit market increased by 0.8%.
Meanwhile, the household debt service ratio, measured as the total mandatory payments of principal and interest on credit market debt as a proportion of household disposable income, was 15.22% in the third quarter, in up from 15.08% in the second quarter, as debt payments grew faster than income.
The cost of borrowing has increased since the Bank of Canada began raising interest rates in 2022 to bring inflation back to its 2% target.