The health of Canadian households improved in the fourth quarter of 2013, according to Statistics Canada.
Household net worth advanced 3%, led by a 5.9% gain in the value of shares and other equities. Shares and other equities grew on the basis of the continued strength in domestic and foreign equity markets. The increase in household net worth was also supported by a 1.6% gain in the value of household real estate. On a per capita basis, household net worth rose to $217,700 in the fourth quarter.
The ratio of financial assets to non-financial assets continued its general upward trend, which began after the market decline in 2008 when equity prices decreased sharply. At the end of the fourth quarter, the ratio stood at 118.4%, up from 115.9% in the previous quarter.
At the end of the fourth quarter, mortgage debt stood at just over $1.1 trillion, up 1.1% over the previous quarter. Consumer credit debt reached $508 billion at quarter end, up 0.5% over the third quarter.
Leverage, as measured by household credit market debt to disposable income, edged down from 164.2% in the third quarter to 164.0% in the fourth quarter. The household debt service ratio, defined as household mortgage and non-mortgage interest paid divided by disposable income, remained at a record low. Owner’s equity as a percentage of real estate was 69.5% at the end of the fourth quarter, marginally higher than the 69.4% recorded at the end of the previous quarter.
Household demand for funds has moderated over the past six years. The average quarterly growth in mortgage debt in this period was 1.8%, while that of consumer credit debt was 1.3%. In contrast, the average quarterly growth in mortgage debt and consumer credit debt were both higher at 2.5% each from 2002 to 2007.
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