Here's how Canadians are coping with higher interest rates in 5 charts

financialpost.com:

Canadians continue to be hit by the climb in Bank of Canada interest rates, with the costs of paying down debt rising to a record in the third quarter while net worth declined, according to Statistics Canada household finance data released Dec. 13.

Here are five charts that show how higher interest rates have impacted Canadians, along with economists’ reaction to the data:

The amount Canadians are paying to cover the costs of debt rose to a record in the third quarter of 2023, with the household debt service ratio increasing to 15.2 per cent from 15.1 per cent in Q2, Statistics Canada said.

Most of the increase can be attributed to a record rise in interest payments over the past six quarters, up from 5.9 per cent of disposable income to 9.3 per cent, which amounts to the highest level since 1995, said economist Daren King at National Bank of Canada.

Borrowing costs could go higher still as many homeowners are set to renew their mortgages over the next two years, King said. “This means that the interest payment shock is not over and represents a headwind for the economy over the coming year,” he said.

His view is backed by Royal Bank of Canada economists, who also predict continued rising costs “with a wave of mortgage renewals still to come.” 

Those higher costs will continue to pressure consumer spending, said Shelly Kaushik, an economist with Bank of Montreal, in a note to clients.

Household net worth fell by $301.2 billion to $16.2 trillion, down from $16.3 trillion in the second quarter, Statistics Canada said.

“The financial weather turned stormy in the third quarter as both financial and non-financial asset values declined, dragging down total household wealth,” said Maria Solovieva, an economist with