OTTAWA - Canadian household debt hit a new record in the third quarter, as borrowing rose faster than their income.
Statistics Canada said Monday the amount of household debt compared with disposable income rose to 163.7 per cent, up from 162.7 per cent in the second quarter.
That means the average household has roughly $1.64 in debt for every dollar of disposable income.
The Royal Bank attributed the rise to the hot real-estate market.
“Robust housing market activity nationally and an attendant lift in residential mortgage demand drove overall household debt balances higher,” Royal Bank economist Laura Cooper said in a report.
Disposable income increased 0.8 per cent, while household credit market debt grew 1.4 per cent.
Total household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, reached $1.892 trillion.
Consumer credit debt was $572.3 billion, while mortgage debt stood at $1.234 trillion.
Low interest rates have helped consumers manage their debts.
The household debt service ratio, the total obligated payments of principal and interest as a proportion of disposable income adjusted to include interest paid, slipped to 13.6 per cent.
The interest-only debt service ratio, household mortgage and non-mortgage interest paid as a proportion of disposable income, fell to a record low 6.1 per cent.
The ratio of total household debt to total assets edged up in the third quarter to 17.0 per cent from 16.9 per cent in the second quarter.