The amount that Canadians owe compared to their disposable income rose to an all-time record last quarter, although their net worth also increased.
Statistics Canada reported Friday that the level of household credit market debt to disposable income increased to 163.7 per cent in the third quarter from 163.1 per cent in the second quarter.
That means Canadians owe nearly $1.64 for every $1 in disposable income they earn in a year.
'The seasonal bounce in mortgage borrowing in the previous quarter picked up into the fall'- Royal Bank economist Laura Cooper
Policymakers are fixated on the debt ratio in part because it was at above 160 per cent that households in the United States and Britain ran into trouble about five years ago, contributing to defaults and the financial crisis that triggered the 2008-09 recession.
Debt loads can be influenced by seasonal factors, and although the headline figure is higher, the rate of growth in that ratio was the smallest in 12 years.
"Those figures should be encouraging for policymakers and suggest that the Bank of Canada's belief that imbalances are evolving constructively is right on the mark," said Benjamin Reitzes, a senior economist with BMO Capital Markets.
Indeed, while they are borrowing more, Canadians are also worth more as their assets increase by a similar amount. The national net worth increased to $7.5 trillion in the third quarter, up 2.1 per cent from the previous quarter.
On a per capita basis, that works out to $212,700 for every Canadian. The previous quarter, that figure was $208,300.
Canadians saw their financial assets go up in value, as well as their non-financial assets (such as houses) do the same. The value of shares and other equities gained 3.7 per cent in the quarter, while the value of household real estate gained 1.5 per cent.
"The pace of debt accumulation picked up slightly in the third quarter as the seasonal bounce in mortgage borrowing in the previous quarter picked up into the fall," Royal Bank economist Laura Cooper said.