Levels of household debt across Canada declined in this year’s first quarter as disposable income rose across the country.
Statistics Canada reports that households owed $1.76 of debt for every dollar of disposable income in this year’s first quarter.
That was down from $1.78 of debt recorded in the fourth and final quarter of 2023.
At the same time, the amount of disposable income that Canadians allocated to servicing their debt (principal and interest combined) was 14.91% in Q1 of this year, down slightly from 14.98% in Q4 2023.
Between January and March of this year, disposable incomes across Canada rose 1.9% while debt payments increased 1.4%, said Statistics Canada.
Over the past two years, Canadians have seen their debt obligations rise alongside higher interest rates.
However, the Bank of Canada has now begun lowering interest rates, announcing the first rate reduction in four years earlier in June.
The lower interest rates come as inflation across Canada moderates and the economy slows.
