Markets drive up Canadians' net worth
December 14, 2009
Madhavi Acharya-Tom Yew
Surging stock markets pushed up Canadians' net worth in the third quarter but debt levels are rising, too, according to a report from Statistics Canada.
The result is a record household debt-to-income ratio of 145 per cent, the agency said.
Household net worth, the value of families' assets such as cars, homes, and savings accounts, minus what they owe, reached $5.72 trillion at the end of September, StatsCan said Monday.
That's an increase of 2.3 per cent, marking two quarters of gains after three consecutive drops.
Household debt, mainly mortgages and consumer credit, kept rising from July to September as Canadians rushed to take advantage of low interest rates to buy homes, renovate, and shop. Personal sector liabilities rose to $1.41 trillion, up 1.6 per cent.
National net worth, which includes business and government assets and liabilities, fell 1.3 per cent to $5.89 trillion as governments and consumers took on more debt, the report said.
Canada's premier stock market, the S&P/TSX Composite Index rose 9.8 per cent in the third quarter. That's on top of a 19 per cent gain in the previous three months.
The central bank has made a pledge to stand pat on interest rates until June 2010 to preserve the nascent economic recovery that is taking root. Keeping rates low encourages spending and borrowing, and that spurs economic growth.
Still, the Bank of Canada warned last week that rising debt levels will make Canadian households more vulnerable when interest rates do go up.
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