The ratio of household debt to disposable income fell to its lowest in more than a decade in Canada thanks to massive government transfers and deferred payments.Household debt on the credit market fell to 158.2% of disposable income in the second quarter, from 175.4% previously, Statistics Canada reported in Ottawa on Friday. This was due to a 10.8% increase in household disposable income, while the stock of debt in the credit market remained relatively unchanged, the agency said.
Government income transfers during COVID-19 and mortgage deferrals along with historically low interest rates have brought financial relief to many Canadians during the pandemic, especially those who lost their jobs during shutdowns nationwide businesses and home orders.
Canadians also spend less of their take home pay to service this debt. The household debt service ratio fell to 12.4% from 14.5%, the agency said. This is the biggest drop on record.