Household Debt Now Rising Faster than Wealth The debt of Canadian households is now rising faster than their wealth in the wake of the stock market correction and a housing market slowdown. ... The...

Household Debt Now Rising Faster than Wealth


The debt of Canadian households is now rising faster than their wealth in the wake of the stock market correction and a housing market slowdown. ... The mortgage market is still expanding ... although it will likely slow by more than half ... due to the correction in the formerly overheated markets in western Canadian cities and the tightening up of federal mortgage lending restrictions. There are also early signs that the pace of growth in non-mortgage consumer credit is slowing. ... And that’s a good thing, said CIBC economist and author of the report Benjamin Tal. “If household credit were to continue to rise by 13% a year at some point I would become concerned because you would have too much credit and not enough wealth to support it ... “During the first quarter of the year, overall household debt rose by almost 3%, while personal disposable income rose by 2%. ...

a. Explain why the growth of household wealth has slowed in Canada.

b. When a household buys stocks, does that represent consumption, saving, or investment? Explain.

c. When a household buys a new house, does that represent consumption, saving, or investment? Explain.

d. What factors may influence a household when deciding between buying stocks, bonds, or a house?