The average Canadian household was worth $232,200 in the third quarter of 2014, a 1.3 per cent gain from the previous quarter, driven primarily by higher housing prices, according to Statistics Canada.

But the rising net worth was offset by news that borrowing grew even more quickly, by 1.5 per cent, and disposable income was not keeping up, leaving the ratio of debt to disposable income to grow by 1.1 per cent in the third quarter.

That means that Canadians owe, on average, 162.6 per cent of their annual income, a collective total of $1.8 trillion.

“Given the record debt ratio, there’s nothing here to change the Bank of Canada’s view that high household debt is a significant risk to financial stability,” said Benjamin Reitzes, senior economist at BMO capital markets.

Last week, Bank of Canada governor Stephen Poloz flagged household debt and high housing prices as a risk to Canada’s economy.

Low interest rates help

However, Reitzes was encouraged by Statistics Canada’s finding that mortgage debt is actually lower than previously thought. 

The low interest rates are making it easier for Canadians to manage their debt and they have been paying it off more quickly for the past four years, Statistics Canada estimated.

Statistics Canada said the household debt service ratio, defined as household mortgage and non-mortgage interest paid as a proportion of disposable income, edged down to an all-time low of 6.8 per cent in the third quarter

Meanwhile, the ratio of household net worth to income is at an all-time high of  746 per cent of disposable income.

Two things are pushing up Canadian’s net worth – the rising prices of houses and the falling loonie.

As the Canadian dollar falls, all the stocks and bonds that Canadians hold in U.S. dollars or other currencies become worth more.

Average net worth up 10.5% annually

At the same time, the poor performance of Canadian stocks is weighing on their balance sheets.

"Canadian households' net worth has improved considerably over the last year, with net worth up 10.5 per cent over a year ago,” according to a note from TD economist Leslie Preston.

“However, the recent weakness in Canadian equity markets is likely to weigh on household wealth in fourth quarter,” she added.

Of greater concern is the continuing rise of household debt after a period where it had seemed to plateau.

“The recent acceleration in the housing sector has taken the debt-to-income ratio to a new high, and household leverage remains a risk to financial stability in Canada,” Preston said.

National net worth rose 2.8 per cent from the second quarter to $8.12 trillion or $227,500 per capita.