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Mortgage credit rising, but non-mortgage debt dropping like a rock.

Contrary to the common belief that debt among Canadians is rising during the pandemic, non-mortgage debt had significantly dropped during 2020. Have a look at the graphs below, provided by Statistics Canada.

Household Debt in Canada decreased to 167.70 percent of gross income in 2021 from 169.87 percent in

Source: Statistics Canada

Household Saving Rate in Canada increased to 13.10 percent in the first quarter of 2021 from 12.70
percent in the fourth quarter of 2020.

Source: Statistics Canada

From the provided statistics, two main points were uncovered:

  1. Canadian Household Savings Rate is 13.10% vs <5% prior to the pandemic, a significant increase.
  2. The debt to Income ratio is a universal calculation that measures a countries overall consumer’s financial health.  At 167% it’s much lower than the approximately 173% we saw prior to the pandemic.

So yes Canadians are taking out more mortgages.  This is true. But they’re also saving way more and their debt to income ratio is much lower.  Note the below graph and the significant drop in the Yearly change in Non-Mortgage Credit.  Mortgage credit is rising, but non-mortgage debt is dropping like a rock.  It could be smart for Canadians to consolidate 20% credit cards with a 2% mortgage. 

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