A worldwide increase in bonds and stocks helped Canadians’ wealth by the end of last year, making up for ongoing decreases in real estate prices.
Canadians’ total net worth grew by 1.8% to $16.42 trillion in the fourth quarter, according to Statistics Canada on Wednesday. The rise was fueled by a 5% increase in the value of household financial assets during the quarter, the largest jump since 2010, not related to the pandemic.
Household debt increased by 3.4% in 2023, the slowest increase since 1990, due to higher interest rates affecting housing activity and limiting mortgage growth. The debt to income ratio dropped to 178.7% at the end of last year, the lowest since the second quarter of 2021.
The data indicate the financial strength of Canadian households, which have managed to grow their wealth despite one of the most aggressive rate hikes from the central bank. Household incomes increased by 1.3% in the quarter, the agency reported.
The household debt service ratio, which measures the total payments of principal and interest made by Canadians as a share of their disposable income, stood at 15% in the fourth quarter, remaining almost the same as the previous month, but still the highest level since data collection began.
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Economists surveyed by Bloomberg expect the Bank of Canada to begin reducing borrowing costs in June. Traders in overnight swaps see July as the most probable timing.
