Prices are plunging for homes and stocks
A sharp decline in Canadians’ net worth was registered during the second quarter amid sustained volatility in financial markets and the housing sector, according to Statistics Canada.
Household net worth saw a 6.1% quarterly decrease to settle at $15.2 trillion in Q2, representing a precipitous drop of $990 billion.
While household wealth remained nearly $3 trillion higher than pre-pandemic levels, the Q2 figure was also the largest decrease in at least 22 years, significantly outstripping a 5% decline seen during the global financial crisis in 2008, StatCan said.
Read more: Equifax Canada reports latest consumer debt levels
Concurrently, Canadian households took on an additional $56.3 billion in debt, bringing the nation’s total household debt load to roughly $2.8 trillion. The household debt-to-income ratio correspondingly increased from 179.3% in Q1 to 181.7% in Q2.
Economists cautioned that this might be just the beginning when it comes to added debt, as more Canadians will be forced to borrow more expensive loans due to multiple inflationary pressures.
“Looking ahead, financial headwinds are only going to intensify, as job gains slow while interest rates continue to march higher,” said Ksenia Bushmeneva, economist at Toronto-Dominion Bank. “This is going to push debt servicing costs higher over the rest of this year and into the next one.”
