Better-paid consumers may have taken the wind out of the government’s sails as it considers embarking on another round of mortgage rule changes.
According to StatsCan's latest report, household credit fell to 150.6 per cent of income from the record high of 151.9 per cent recorded in the third quarter.
That household debt includes mortgages, consumer credit and loans.
It was rising income, and not more conservative spending, that appears to have reversed the tides.
While Canadians continued to increase their overall debt load, to $1.60 trillion from C$1.58 trillion in Q3, their disposable income outpaced that.
Still, the mortgage industry is hoping overall easing of household debt levels relative to income will scuttle any government plans to further tighten mortgage rules in order to get Canadians to rein in spending.
But there’s growing indication Finance Minister Jim Flaherty could move to lower the maximum amortization for insured mortgages to 25 years and, possibly, hike the cost of default insurance for borrowers.
Last month, some 10 of 14 economists and strategists surveyed for Reuter’s first poll on the Canadian housing sector said Ottawa does, indeed, seem poised to tighten mortgage rules within the next 12 months.
Moreover, they believe that intervention is likely to come as early the March 29 budget announcement.
The Central Bank’s decision this month to hold its overnight interest rate steady have increased speculation, as did BMO’s reintroduction of that 2.99 per cent interest rate on five-year fixed mortgages.
The fear is that last move lead to a bump-up in new mortgages, reversing the gains consumers made in the last three months of 2011.