Canada’s household savings rate fell to its lowest level in more than half a century, amid an already stressful fiscal environment characterized by growing debt loads.
Statistics Canada figures indicated that the unadjusted household savings declined to 0.7% during the first quarter of 2019.
According to Better Dwelling, this was 78% lower compared to Q4 2018 and around 63.2% lower annually, leading to the weakest reading in 59 years.
“Household savings have been on the slide, but it rarely reaches this point,” the real estate information portal’s analysis noted. “It’s not an encouraging sign when savings rates top out at the same time as credit growth.”
Data from Scotiabank showed that last June, the nation’s household mortgage credit saw its largest month-over-month increase in two years, at 5.2%.
June 2019 also saw the outstanding balance of Canadian mortgage debt grow by 3.7% annually, up to $1.57 trillion total.
“Mortgage growth has surely rebounded after a period of deceleration from early-2017 to its mid-2018 trough which was induced by a series of measures aimed at tackling runaway home prices,” Scotiabank economist Juan Manuel Herrera and research analyst Alena Bystrova wrote in their report.
StatsCan estimated that overall household savings during the second quarter of this year was just at $2.2 billion, declining by 78% from Q1.
“Canadians are putting away the same amount of cash they did 40 years ago, with a much bigger population,” Better Dwelling warned.