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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CANADA DATA
- As noted in our Brief earlier, the household debt service ratio increased to record high in Q3 at 15.2% of disposable income from an upward revised 15.1% in Q2 (initial 14.8%).
- It tops the 15.0% seen through 2019 and briefly touched in 4Q07.
- The trend move continues to be driven by mortgage debt servicing, continuing to push new highs at 8.3% of aggregate disposable income, whilst non-mortgage debt increased to 6.9% but remains below the 7.5-8% GDP levels seen before the pandemic.
- This continued leg higher in mortgage service costs shouldn’t be a surprise of course. Back in the April MPR when the overnight rate was 4.5%, the BoC showed a rare market rates-based scenario when there were 60bp of cuts by end-2023 and a further 100bp of cuts by end-2024 prices (i.e. dipping below 3% by end-2024). This scenario yielded a mortgage service cost peaking at circa 8.5% GDP in late 2023 with the interest-only component at 5.5% of disposable income.
- The overnight rate is currently 5% (where it will end this year) whilst the CORZ4 implied yield is only just under 4% for a full 100bps less easing than in that BoC scenario.
Chart from April 2023 MPR:
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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