Canadian senior families’ debt rising: StatsCan

Strong housing market responsible for both higher mortgage debt and an increase in the value of homes

Mario ToneguzziThe proportion of senior families carrying debt in Canada rose from 27 per cent in 1999 to 42 per cent in 2016, according to a report released on Wednesday by Statistics Canada.

However, the federal agency also said the median net worth of senior families with debt – which corresponds to the total value of assets minus the total amount of debt – increased from $298,900 in 1999 to $537,400 in 2016.

“Senior families are defined as families whose major income earner was at least 65 years of age. A strong housing market in recent years was responsible for both higher mortgage debt among senior families and for an increase in the value of their homes,” said StatsCan.

“Among senior families with debt, the median amount held was $25,000 in 2016, up from $9,000 in 1999 in 2016  . . . However, the median value of assets held by these families also rose, from $327,000 in 1999 to $607,400 in 2016, also in 2016.

“The significant increases in debt and assets of seniors was largely attributable to the strong housing market in recent years. From January 2005 to December 2016, housing prices rose by 109.8 per cent. … These changes affected the financial balance sheet of many Canadian families.”

StatsCan said about two-thirds of the overall increase in average debt levels was attributable to mortgage debt, while the remainder was due to an increase in consumer debt.

It said real estate assets represented 52 per cent of the overall increase in the average value of total assets over the period. The value of employer pension plans contributed an additional 12 per cent, while the remainder (36 per cent) was due to increases in other types of assets (such as financial investments, for example, RRSPs and other non-housing asset items).

“Among senior families with debt, the median debt-to-income ratio more than doubled from 0.24 in 1999 to 0.52 in 2016. This means that, for the typical family in 2016, debt amounted to 52 per cent of after-tax family income, up from 24 per cent in 1999. In 2016, more than one-third (36 per cent) of senior families had a debt-to-income ratio of at least 1.0, which means that they had more debt than income. In 1999, more than one in five families (21 per cent) were in that situation,” added Statistics Canada.

Mario Toneguzzi is a Troy Media business reporter based in Calgary.

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