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CANADA: Household Balance Sheets Remain Healthy On Aggregate (2/3)

MARKET INSIGHT
  • Debt to incomes are historically high but household balance sheets are extremely healthy on aggregate.
  • Despite notable wealth destruction in Q2, roughly half on lower house prices and half on equity markets sliding, household net worth remained above pre-pandemic levels at circa 550% GDP.
  • In this regard, it will only be those borrowers who stretched themselves at the top of the market that are susceptible to the current slowdown.
  • However, the extent to which prices continue to fall could start to drag a larger share of borrowers into financial trouble, especially as fixes of mortgages taken on early after the pandemic upheaval start to be rolled at much higher rates.

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