Scorching real estate prices helped add to the wealth of Canadian households at a record pace during the first quarter of the year, even as COVID-19 lockdowns shut down huge swaths of the economy.
Statistics Canada says national net worth jumped more than $1 trillion to nearly $15 trillion, a 7.7 per cent increase from the previous quarter.
The value of residential real estate rose by $595 billion for a blistering 9.4 per cent jump, for the third straight quarterly increase. For context, Statistics Canada points out that the value of residential real estate rose just over $750 billion in 2020.
Over the longer term, the agency says the average selling price of a home is up 87 per cent over the last 10 years.
Canadians continue to take advantage of low interest rates by piling on mortgage debt. It dipped to $29 billion but follows an all-time high of $32.1 billion in the previous quarter and the second-highest on record.
Meanwhile, higher-interest debt is being paid down. Statistics Canada says non-mortgage loans, including consumer credit, fell $13.5 billion since 2019 to $786.5 billion.
Trading in high-interest debt for low-interest debt
With fewer places to spend money at, savings rates were up too. The seasonally adjusted household savings rate went up from 11.9 per cent in the fourth quarter to 13.1 per cent in the first quarter. Statistics Canada says it has been at double-digit levels since the second quarter of 2020.
All of this helped push the household debt-to-income ratio lower to 172.3 per cent in the first quarter from 174 per cent in the fourth quarter. In other words, there's a $1.72 of credit market debt for every dollar of household disposable income.
But BMO economist Priscilla Thiagamoorthy says the data don't necessarily mean everyone has their house in order.
"Canadian household finances improved in the first quarter of this year as the key household debt-to-disposable income ratio took yet another step away from the record highs seen prior to the pandemic," said Thiagamoorthy.
"Although the growth of mortgage debt could continue to slow in the coming quarters, the flow remains elevated. As such, housing market imbalances and still-high household debt remain a key vulnerability to the Canadian economy."
The findings echo a report earlier this week from Equifax, which found new mortgages were up 41.2 per cent in the first quarter compared to the first quarter of 2020. It also found credit card debt fell to the lowest point in six years.
"The number of cards per consumer has been on a downward trajectory since 2016. Consumers are moving away from multiple cards and being more careful with their credit. Younger consumers who are more likely to miss payments on credit cards have also seen a drop in their spend-to-payment ratio," said Equifax Canada's AVP of Advanced Analytics, Rebecca Oakes.
"Likewise, Gen Z has managed to reverse this ratio and are also paying off their credit card debt."
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.