Canada's household debt-to-income ratio rose 0.9 percentage point (ppt) to a seasonally adjusted 179.6% in Q1 as growth in debt outpaced disposable incomes, said Bank of Montreal (BMO) after Friday's data.
The ratio has been rising since the end of 2024, although it remains roughly 10 ppts below the all-time high set in 2022, noted the bank. The seasonal adjustment also played a role this quarter as the unadjusted ratio fell 0.4 ppt to 174.9%.
The household debt service ratio -- interest and principal as a share of disposable income -- ticked up to 14.75% but remains within its range of the past two years. While this ratio will continue to face some upside pressure over the next year amid mortgage rate resets, it has performed better than expected thanks to a combination of past rate cuts and income growth, stated BMO.
That has allowed households to support economic growth amid elevated uncertainty.
On the flip side, household net worth rose to 1005.1% of disposable income, driven by strong equity gains, while higher real estate values also contributed, added the bank. The share of owners' equity in real estate ticked up to 72.8%, although it has been on a downward trend amid a prolonged correction in the housing market.
General government debt -- including all levels of government -- continued to march higher, given hefty stimulus plans, pointed out BMO. Gross government debt stepped up to 131.9% of gross domestic product, its highest in four years, while net debt rose to 21.2% of GDP.
Canadian households continue to be in a relatively healthy position in the face of significant economic shocks, according to the bank.