Canadian Household Net Worth Grows

Canadian households were wealthier in the 2nd quarter of 2009 after they had lost much ground in the 3 previous quarters with the stock market gains leading the recovery, noted Statistics Canada today (Sept. 14th ).

Household net worth has advanced by $141 billion to $5.6 trillion.

Canadian stock markets partially recovered in the 2nd quarter; the S&P/ Toronto Stock Exchange composite index went up nearly 20%.

This increase in the value of household financial assets was the principle behind the rise in household net worth. Household financial assets include shares, mutual funds and pension assets.

Credit usage rose more quickly in this quarter, with people borrowing for mortgages as the resale housing markets picked up. There is also more consumer credit rises as car sales began to increase.

Despite growth in credit market debt, we see that household debt in relation to net worth went down during the second quarter. This was due to gains in assets, which were able to more than offset the increase in liabilities.

Households had 24.8 cents of debt for every dollar of net worth, compared to 24.9 cents in the first quarter.

Although Canadian household net worth grew, which reflects stock market gains, there is an increase in the use of credit as well.

Canadians might be getting richer in the or financially stable in the past few months, however if they do not tread carefully they might find themselves in a mountain of debt.