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Canadians' debt to disposable income ratio inches down to 170.4%

The amount that Canadians owe compared to what they have to spend was slightly lower at the end of 2017, but is still sitting near record highs.

Canadians owe on average $1.70 for every dollar they have in disposable income

While the ratio has come down slightly, Canadians still owe $1.70 for every dollar they have in disposable income, Statistics Canada said Thursday. (Mark Blinch/Reuters)

The amount that Canadians owe compared to what they have to spend was slightly lower at the end of 2017, but is still sitting near record highs.

Statistics Canada reported Thursday that household debt as proportion of household income stood at 170.4 per cent at the end of December, a slight decrease from the figure seen three months earlier but a trend that the data agency described as "relatively unchanged."

That means that for every dollar of disposable income that Canadian households have, they owe more than $1.70 in debt. While that's still high, it's a possible sign that Canadians may have seen the end of the slow uptick in that number.

"While it's too early to tell, we just might have seen the peak in the debt ratio in [the third quarter]," Bank of Montreal economist Benjamin Reitzes said of the numbers, "as [the first quarter of 2018] will no doubt see a sizeable decline due [slowed housing] and higher interest rates."

All in all, Canadian households owed a total of more than $2.1 trillion at the end of December, a figure that increased by 1.1 per cent in the last three months of the year. 

Much of that — almost $1.4 trillion — came in the form of mortgages, but Canadian households also owe more than $630 billion in various forms of consumer debt. And consumer debt is now increasing faster that mortgage loads are.

But while Canadians are borrowing more, their net worth is going up because the value of their assets is increasing at a faster rate.

Leverage — the ratio of total household debt to total assets — declined slightly from 16.7 per cent to 16.6 per cent at the end of the fourth quarter, and is now at its lowest level since 2008.

"This implies that Canadian households have $6.02 of assets for every $1.00 of debt," Reitzes said. "Not too shabby."

Despite the debt, those higher asset values mean that the net worth of the average Canadian broke through the $300,000 barrier for the first time.

"On a per capita basis, national net worth increased from $296,200 in the third quarter to $302,300 in the fourth quarter," Statistics Canada said.

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