The increase came as households borrowed $16.5 billion on a seasonally adjusted basis in the first quarter.
The household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, was 14.9 per cent in the first quarter of 2023, up from 14.4 per cent in the fourth quarter of 2022.
“The combination of higher inflation and debt payments already soaked up all of the growth in household after-tax incomes last year, and looks likely to do so again in 2023,” Janzen said. Canadians’ combined outstanding debt hit a new record in the first quarter of the year, reaching $2.32 trillion, TransUnion reported two weeks ago. Average balances on most consumer credit products rose by 11.4 per cent, while average mortgage balances were up 7.1 per cent.
“The Bank of Canada will need to maintain a close watch on household credit performance as higher interest rates continue to weigh on Canadian households this year,” said Solovieva.
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