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Canadians took on less debt in first quarter of 2019 — but total amount they owe is still growing

While Canadians are finally easing up on their credit debt, their mortgage commitments continue to push overall debt levels up.

Debt to disposable income ratio holds steady at 177%, just below record high set in 2018

Canadians added more than $20 billion worth of new debt in the first three months of this year. (The Associated Press/Elise Amendola)

While Canadians are finally easing up on their credit debt, their mortgage commitments continue to push overall debt levels up.

That's one of the main takeaways from a Statistics Canada report on the national balance sheet released Thursday.

The data agency reported that total credit market debt — which includes all the mortgages, credit cards and other forms of personal debt that individuals owe — came in at $2,230.6 billion in the first quarter, or just over $2.3 trillion.

That's an increase of 0.2 per cent from the previous quarter, the slowest pace of growth since 2011.

Toronto-Dominion Bank economist Ksenia Bushmeneva said the data suggests "consumers continued to moderate their borrowing, with debt increasing at the slowest pace in eight years, as past rate hikes and a more cautious attitude to spending continue to weigh on credit demand."

The numbers suggest Canadians are indeed still borrowing more and more — especially for mortgages — but they may be starting to tighten their belts with regards to other types of debt.

Canadians borrowed $20.2 billion worth of new debt during the period. That's about $400 million less than they borrowed during the previous quarter. Within that, the value of new mortgage debt increased by $700 million during the period, but that was offset by a reduction of more than $1 billion in other types of debt.

It's the growth of that second form of debt that has some observers concerned.

Non-profit consumer advocacy group the Credit Counselling Society said in a release after the data came out that they "continue to hear from Canadians who are concerned [about] how to make ends meet as their debt continues to grow."

The average debt load of an individual seeking the help of the CCS is about $30,000 on top of any mortgage at the moment.

"This is alarming, as two decades ago, the average was $12,000 of non-mortgage debt," CCS spokesperson Stacy Yanchuk Oleksy said. 

Bushmeneva said that the uptick in mortgage borrowing could be a sign that borrowers think the slowdown in the housing market may be over and that they are once again more willing to jump in.

"That being said, we do not expect the market to go back to its frothy days, with gains in prices and home sales remaining relatively modest," she said.

Debt to income level flat

Total debt loads are still inching higher, but the good news is that so are income levels. As such, a closely watched ratio of how much people owe compared to what they earn held steady.

The debt to disposable income level came in at 177.6 per cent during the quarter, the same level as it was at the end of 2018. That means for every dollar of disposable income that households have to spend, they owe almost $1.78. 

The ratio peaked in the third quarter of last year, at 178.29 per cent.