Latest Developments in the Canadian Economic Accounts
Understanding household credit measures, a joint study by the Bank of Canada and Statistics Canada

Release date: March 15, 2018

The Bank of Canada (the Bank) and Statistics Canada both produce aggregate measures of borrowing, or credit, for sectors of the Canadian economy. The Statistics Canada measures are part of the National Balance Sheet Accounts (NBSA), which cover the entire economy and directly align with the internationally recognized national accounting principles detailed in the United Nations System of National Accounts. They are available by sector as currently defined in the Canadian System of Macroeconomic Accounts. The NBSA are created using a balance sheet approach, which involves presenting the assets and liabilities for all instruments and sectors of the economy. In other words, for each instrument all holders of financial assets must have corresponding counterparties who hold the financial liabilities, and as such, the sum of these are equal in the aggregate. The Bank’s data are presented based on the issuer of credit, i.e., the holder of the financial assets, and do not display liabilities.

Both measures are constructed primarily from records of Canadian financial institutions and provide thorough coverage of lending by those institutions. They show a similar picture of the indebtedness of Canadian households, currently and in the past. However, the use of differing classification systems, methodologies, and definitions results in some reconcilable differences in the aggregate measures. Therefore, the Bank and Statistics Canada conducted a joint study to identify and understand these key differences between their respective measures of household credit.

Household credit was the focus of this current exercise, while business credit will be investigated later. The magnitude of the variance between the Bank's and Statistics Canada's main household credit aggregates is shown below. While the differences are small at the aggregate level, they are larger when examined by component. The differences at the level of residential mortgages and consumer credit are examined in subsequent sections.

Table 1
Main household credit aggregates from the Bank of Canada and the National Balance Sheet Accounts
Table summary
This table displays the results of Main household credit aggregates from the Bank of Canada and the National Balance Sheet Accounts Main household credit aggregates, Bank of Canada, National Balance Sheet Accounts, Differences, Residential mortgages, Consumer credit, Total household credit, Household mortgage liabilities, Non-mortgage loans and Total difference in household credit, calculated using millions of dollars and % units of measure (appearing as column headers).
Main household credit aggregates
Bank of Canada National Balance Sheet Accounts Differences
Residential mortgagesTable 1 Note 1 Consumer creditTable 1 Note 2 Total household credit Household mortgage liabilitiesTable 1 Note 3 Consumer creditTable 1 Note 4 Non-mortgage loansTable 1 Note 5 Total household credit Total difference in household credit Total difference in household credit
millions of dollars %
First quarter 2012 1,099,569 495,207 1,594,776 1,024,021 508,234 78,551 1,610,806 -16,030 -1.01
Second quarter 2012 1,116,727 501,415 1,618,142 1,041,041 515,653 79,893 1,636,587 -18,445 -1.14
Third quarter 2012 1,137,382 508,476 1,645,858 1,058,772 524,036 79,132 1,661,940 -16,082 -0.98
Fourth quarter 2012 1,151,385 511,691 1,663,076 1,069,928 527,886 78,330 1,676,144 -13,068 -0.79
First quarter 2013 1,158,938 507,589 1,666,527 1,077,924 526,844 80,949 1,685,717 -19,190 -1.15
Second quarter 2013 1,176,275 512,199 1,688,474 1,096,521 534,018 81,229 1,711,768 -23,294 -1.38
Third quarter 2013 1,197,326 516,411 1,713,737 1,113,910 540,354 82,693 1,736,957 -23,220 -1.35
Fourth quarter 2013 1,211,490 519,316 1,730,806 1,123,435 544,864 82,517 1,750,816 -20,010 -1.16
First quarter 2014 1,218,078 517,659 1,735,737 1,129,674 543,233 84,326 1,757,233 -21,496 -1.24
Second quarter 2014 1,234,194 523,983 1,758,177 1,147,757 552,592 83,735 1,784,084 -25,907 -1.47
Third quarter 2014 1,257,385 529,692 1,787,077 1,167,939 558,650 85,200 1,811,789 -24,712 -1.38
Fourth quarter 2014 1,273,562 535,087 1,808,649 1,180,341 562,029 85,870 1,828,240 -19,591 -1.08
First quarter 2015 1,281,606 533,358 1,814,964 1,188,478 560,408 87,488 1,836,374 -21,410 -1.18
Second quarter 2015 1,302,124 540,849 1,842,973 1,211,403 568,361 93,252 1,873,016 -30,043 -1.63
Third quarter 2015 1,331,297 546,086 1,877,383 1,237,241 574,192 94,126 1,905,559 -28,176 -1.50
Fourth quarter 2015 1,354,228 549,176 1,903,404 1,256,015 576,753 94,960 1,927,728 -24,324 -1.28
First quarter 2016 1,363,288 549,020 1,912,308 1,264,914 576,046 98,010 1,938,970 -26,662 -1.39
Second quarter 2016 1,385,652 560,357 1,946,009 1,291,464 588,557 99,181 1,979,202 -33,193 -1.71
Third quarter 2016 1,415,780 567,239 1,983,019 1,315,313 592,321 98,823 2,006,457 -23,438 -1.18
Fourth quarter 2016 1,438,837 572,950 2,011,787 1,331,264 598,978 100,541 2,030,783 -18,996 -0.94
First quarter 2017 1,448,589 573,100 2,021,689 1,341,433 599,572 102,188 2,043,193 -21,504 -1.06
Second quarter 2017 1,471,434 586,860 2,058,294 1,363,076 614,562 103,480 2,081,118 -22,824 -1.11
Third quarter 2017 1,497,950 596,965 2,094,915 1,383,182 622,235 103,633 2,109,050 -14,135 -0.67

While a comparison of the two measures of household credit results in a consistent picture of the extent of Canadians’ indebtedness, differences exist between the measures. Both organizations make certain assumptions based on limited information regarding certain debt components, particularly those related to non-bank financial institutions. Moreover, it is important to note that some assumptions made by each organization are specific to the particular component being measured.

Mortgage liabilities of the household sector

The table below reconciles differences in measures of residential mortgage liabilities; however, Statistics Canada does not publish data separately on residential mortgages. Consequently, the table starts with Statistics Canada’s value for the total mortgage liabilities of households. From there, explainable differences between the Bank’s and Statistics Canada’s values are calculated, including differences due to classification, coverage, and timing, which are explained following the table. This leads to a Statistics Canada approximated value according to how the Bank of Canada defines residential mortgage credit. The residual column is the remaining difference between the approximated value and the Bank’s actual value.

Table 2
Reconciliation of estimates of mortgage liabilities of the household sector between the Bank of Canada (the Bank) and the National Balance Sheet Accounts (NBSA)
Table summary
This table displays the results of Reconciliation of estimates of mortgage liabilities of the household sector between the Bank of Canada (the Bank) and the National Balance Sheet Accounts (NBSA) Residental mortages, NBSA household mortgage liabilities - published, Classification (plus), Coverage (minus), Timing (minus), NBSA approximated to the Bank's definitions, The Bank's residential mortgage credit - published , Difference between NBSA approximated and the Bank's published (Level) and Difference between NBSA approximated and the Bank's published, calculated using millions of dollars and % units of measure (appearing as column headers).
Residental mortages
NBSA household mortgage liabilities - publishedTable 2 Note 1 Classification (plus) Coverage (minus) Timing (minus) NBSA approximated to the Bank's definitions The Bank's residential mortgage credit - publishedTable 2 Note 2 Difference between NBSA approximated and the Bank's published (Level) Difference between NBSA approximated and the Bank's published
millions of dollars %
First quarter 2012 1,024,021 75,734 5,351 2,874 1,091,530 1,099,569 8,039 0.73
Second quarter 2012 1,041,041 77,032 5,349 3,815 1,108,910 1,116,727 7,818 0.70
Third quarter 2012 1,058,772 78,449 5,297 2,824 1,129,100 1,137,382 8,282 0.73
Fourth quarter 2012 1,069,928 79,198 5,212 2,025 1,141,890 1,151,385 9,496 0.82
First quarter 2013 1,077,924 79,890 5,078 2,096 1,150,640 1,158,938 8,298 0.72
Second quarter 2013 1,096,521 81,253 5,134 4,452 1,168,189 1,176,275 8,087 0.69
Third quarter 2013 1,113,910 82,512 5,422 2,492 1,188,508 1,197,326 8,818 0.74
Fourth quarter 2013 1,123,435 83,102 5,415 392 1,200,731 1,211,490 10,760 0.89
First quarter 2014 1,129,674 83,647 5,380 1,099 1,206,843 1,218,078 11,236 0.92
Second quarter 2014 1,147,757 85,067 5,250 4,178 1,223,397 1,234,194 10,798 0.87
Third quarter 2014 1,167,939 86,617 5,244 2,940 1,246,372 1,257,385 11,013 0.88
Fourth quarter 2014 1,180,341 87,528 5,064 1,528 1,261,278 1,273,562 12,285 0.96
First quarter 2015 1,188,478 88,115 5,011 1,104 1,270,479 1,281,606 11,128 0.87
Second quarter 2015 1,211,403 89,940 4,953 5,688 1,290,702 1,302,124 11,422 0.88
Third quarter 2015 1,237,241 91,402 4,957 3,589 1,320,098 1,331,297 11,200 0.84
Fourth quarter 2015 1,256,015 92,862 4,956 3,076 1,340,845 1,354,228 13,383 0.99
First quarter 2016 1,264,914 93,527 4,957 1,489 1,351,995 1,363,288 11,293 0.83
Second quarter 2016 1,291,464 95,634 4,956 5,745 1,376,397 1,385,652 9,255 0.67
Third quarter 2016 1,315,313 97,415 4,957 4,082 1,403,690 1,415,780 12,091 0.85
Fourth quarter 2016 1,331,264 98,550 4,957 2,004 1,422,853 1,438,837 15,984 1.11
First quarter 2017 1,341,433 99,314 4,958 3,266 1,432,524 1,448,589 16,066 1.11
Second quarter 2017 1,363,076 100,836 4,961 5,455 1,453,497 1,471,434 17,938 1.22
Third quarter 2017 1,383,182 102,319 5,215 2,930 1,477,356 1,497,950 20,594 1.37

Classification differences

In the NBSA, residential mortgage liabilities are allocated to various sectors of the economy to reflect the fact that residential mortgage liabilities are found in sectors other than the household sector. For example, if the government required a mortgage to finance a social housing program then the NBSA would show a residential mortgage liability and the corresponding non-financial asset (i.e., residential real estate) in the government sector.  Similarly, non-residential mortgage liabilities are allocated to the various borrowing sectors with some non-residential mortgage borrowers classified to the household sector (i.e., unincorporated businesses).

Generally, financial institutions will make a distinction between their mortgage assets based on the intended use of the mortgaged property, i.e., for residential or non-residential purposes. For example, if a residential care facility requires a mortgage, a financial lender will record this as a residential mortgage. The NBSA emphasizes the debtor-creditor relationship; that is, if the debtor is a corporation, then the liability will be classified as a residential mortgage in the corporate sector. The Bank’s credit statistics classify mortgages to sectors based on the intended use of property; therefore, the Bank includes all residential mortgages in household credit and all non-residential mortgages in business credit.

Currently this adjustment is positive because the dollar value of residential mortgage liabilities outside the household sector is greater than the dollar value of non-residential mortgage liabilities within the household sector.

Coverage

Given the NBSA’s integrated coverage of all sectors of the economy, residential mortgage assets for some sectors are recorded in the NBSA, but are not included in the Bank’s mortgage statistics. These sectors are households (i.e., intra-sectoral lending), non-financial private corporations, governments and non-residents. The Bank excludes the corresponding household mortgage liabilities involving these particular counterparty sectors because they are outside the scope of the Bank’s credit aggregates.

Table 3
A comparison of lending sector coverage for mortgages
Table summary
This table displays the results of A comparison of lending sector coverage for mortgages Mortgages (appearing as column headers).
Mortgages
Bank of Canada National Balance Sheet Accounts
Lending sector
Chartered banks included included
Issuers of asset-backed securities included included
Property and casualty insurance companies included included
Sales finance and consumer loan companies included included
Other private financial institutions partial included
Investment funds included included
Federal and provincial government business enterprises included included
Trusteed pension plans included included
Trust and mortgage loan companies included included
Credit unions included included
Life insurance companies included included
Segregated funds of life insurance companies included included
Households excluded included
Non-financial private corporations excluded included
Governments excluded included
Non-residents (entities outside Canada) excluded partial

Timing differences

The Bank uses data reported on an average-over-the-period basis (the average value of the stock of an asset over the period), whereas Statistics Canada uses data reported on an end-of-period basis (the value of the stock of an asset on the final day of the period). This results in differences between estimates derived from each source, especially when large movements in the value occur throughout the period or near the end. Although this is labelled a timing difference, any data issues between reconciling at the end of the period compared with the average will inherently be included in this calculation.

Consumer credit

The table below reconciles differences in measures of consumer credit, due to differences in how it is defined. This table starts with Statistics Canada’s value for the consumer credit liabilities of households. From there, explainable differences between the Bank’s and Statistics Canada’s values are calculated, including differences due to classification of loans, methodology, concepts, coverage, and timing, which are explained following the table. This leads to a Statistics Canada approximated value according to how the Bank of Canada defines consumer credit. The residual column is the remaining difference between the approximated value and the Bank’s actual value.

Table 4
Reconciliation of estimates of consumer credit between the Bank of Canada (the Bank) and National Balance Sheet Accounts (NBSA)
Table summary
This table displays the results of Reconciliation of estimates of consumer credit between the Bank of Canada (the Bank) and National Balance Sheet Accounts (NBSA) Consumer credit, NBSA consumer credit - published, Classification of loans (plus), Methodological (minus), Conceptual (minus), Coverage (minus), Timing (minus), NBSA approximated to the Bank's definitions, The Bank's consumer credit - published, Difference in NBSA approxiamted and the Bank's published (Level) and Difference between NBSA approximated and the Bank's published , calculated using millions of dollars and % units of measure (appearing as column headers).
Consumer credit
NBSA consumer credit - publishedTable 4 Note 1 Classification of loans (plus) Methodological (minus) Conceptual (minus) Coverage (minus) Timing (minus) NBSA approximated to the Bank's definitions The Bank's consumer credit - publishedTable 4 Note 2 Difference in NBSA approxiamted and the Bank's published (Level) Difference between NBSA approximated and the Bank's published
millions of dollars %
First quarter 2012 508,234 78,551 3,176 30,547 66,219 -342 487,184 495,207 8,023 1.62
Second quarter 2012 515,653 79,893 3,091 30,921 67,900 941 492,694 501,415 8,721 1.74
Third quarter 2012 524,036 79,132 3,233 31,903 67,094 939 500,000 508,476 8,476 1.67
Fourth quarter 2012 527,886 78,330 3,403 31,899 67,367 501 503,046 511,691 8,645 1.69
First quarter 2013 526,844 80,949 3,328 32,487 68,596 -284 503,665 507,589 3,924 0.77
Second quarter 2013 534,018 81,229 3,699 32,452 69,699 942 508,455 512,199 3,744 0.73
Third quarter 2013 540,354 82,693 3,258 33,365 71,444 857 514,122 516,411 2,289 0.44
Fourth quarter 2013 544,864 82,517 3,571 34,219 72,622 628 516,342 519,316 2,974 0.57
First quarter 2014 543,233 84,326 3,513 33,609 74,314 400 515,723 517,659 1,936 0.37
Second quarter 2014 552,592 83,735 3,614 32,241 75,613 1,551 523,309 523,983 674 0.13
Third quarter 2014 558,650 85,200 3,780 32,785 76,790 1,125 529,371 529,692 321 0.06
Fourth quarter 2014 562,029 85,870 3,695 32,684 78,421 576 532,523 535,087 2,564 0.48
First quarter 2015 560,408 87,488 3,799 33,356 78,736 328 531,678 533,358 1,680 0.32
Second quarter 2015 568,361 93,252 4,057 38,244 79,761 1,384 538,168 540,849 2,681 0.50
Third quarter 2015 574,192 94,126 4,186 39,090 80,787 513 543,742 546,086 2,344 0.43
Fourth quarter 2015 576,753 94,960 4,708 39,683 81,469 -253 546,106 549,176 3,070 0.56
First quarter 2016 576,046 98,010 4,755 41,437 83,730 78 544,057 549,020 4,963 0.90
Second quarter 2016 588,557 99,181 5,158 41,632 84,905 1,634 554,409 560,357 5,948 1.06
Third quarter 2016 592,321 98,823 5,059 42,256 84,032 351 559,447 567,239 7,792 1.37
Fourth quarter 2016 598,978 100,541 5,058 44,089 83,771 173 566,427 572,950 6,523 1.14
First quarter 2017 599,572 102,188 5,744 43,704 85,424 185 566,703 573,100 6,397 1.12
Second quarter 2017 614,562 103,480 4,407 42,921 86,871 2,323 581,520 586,860 5,340 0.91
Third quarter 2017 622,235 103,633 4,339 43,424 87,368 684 590,053 596,965 6,912 1.16

Classification differences

In the NBSA framework, the measure of household consumer credit includes only the financing related to current consumption, whereas financing for financial and capital investment expenditures is included in a separate category for non-mortgage loans other than consumer credit. Both categories combined cover the total non-mortgage debt of the household sector as defined in the NBSA. In contrast, the Bank includes borrowing related to all three categories of expenditures in its measure of consumer credit.

Methodological differences

Because Statistics Canada’s data are presented on a debtor-creditor basis, impaired loans are still assets and liabilities on the books of the debtor and creditor at their full outstanding value (gross of impairments). Conversely, the Bank’s loan data are net of impairments because they measure the value of the loan the creditor anticipates will be collected. As a result, all else being equal, the NBSA estimate will tend to be higher.

Conceptual differences

In the NBSA, unincorporated businesses are included in the household sector. As such, the category of non-mortgage loans includes loans made to unincorporated business, while these are excluded from the measure of consumer credit produced by the Bank.

Coverage differences

The Bank’s credit aggregates do not cover certain loans from some sectors that are included in the NBSA. Examples include student loans and farm loans from governments, automobile leases from non-financial private corporations, and some loans from credit unions and other private financial institutions.

Table 5
Detail on coverage differences between the Bank of Canada and the National Balance Sheet Accounts for consumer credit
Table summary
This table displays the results of Detail on coverage differences between the Bank of Canada and the National Balance Sheet Accounts for consumer credit Consumer credit coverage detail , Coverage - total (minus), Coverage - leases (minus), Coverage - student loans (minus) and Coverage - other (minus), calculated using millions of dollars units of measure (appearing as column headers).
Consumer credit coverage detail
Coverage - total (minus) Coverage - leases (minus) Coverage - student loans (minus) Coverage - other (minus)
millions of dollars
First quarter 2012 66,219 7,313 20,038 38,868
Second quarter 2012 67,900 7,546 20,366 39,988
Third quarter 2012 67,094 7,779 20,692 38,623
Fourth quarter 2012 67,367 8,013 21,020 38,334
First quarter 2013 68,596 8,274 21,347 38,975
Second quarter 2013 69,699 8,689 21,696 39,314
Third quarter 2013 71,444 9,104 22,044 40,296
Fourth quarter 2013 72,622 9,520 22,394 40,708
First quarter 2014 74,314 9,984 22,742 41,588
Second quarter 2014 75,613 10,531 22,793 42,289
Third quarter 2014 76,790 11,078 22,842 42,870
Fourth quarter 2014 78,421 11,626 22,891 43,904
First quarter 2015 78,736 12,207 22,940 43,589
Second quarter 2015 79,761 12,632 23,168 43,961
Third quarter 2015 80,787 13,058 23,397 44,332
Fourth quarter 2015 81,469 13,483 23,626 44,360
First quarter 2016 83,730 13,949 23,853 45,928
Second quarter 2016 84,905 14,226 24,287 46,392
Third quarter 2016 84,032 14,504 24,523 45,005
Fourth quarter 2016 83,771 14,781 24,762 44,228
First quarter 2017 85,424 15,274 25,003 45,147
Second quarter 2017 86,871 15,561 25,289 46,021
Third quarter 2017 87,368 15,849 25,539 45,981
Table 6
A comparison of lending sector coverage for consumer credit and non-mortgage loans
Table summary
This table displays the results of A comparison of lending sector coverage for consumer credit and non-mortgage loans Consumer credit and non-mortgage loans (appearing as column headers).
Consumer credit and non-mortgage loans
Bank of Canada National Balance Sheet Accounts
Lending sector
Chartered banks included included
Issuers of asset-backed securities included included
Property and casualty insurance companies zero zero
Sales finance and consumer loan companies included included
Other private financial institutions partial included
Investment funds zero zero
Federal and provincial government business enterprises partial included
Trusteed pension plansTable 6 Note 1 zero zero
Trust and mortgage loan companies included included
Credit unionsTable 6 Note 2 partial included
Life insurance companies included included
Segregated funds of life insurance companies included zero
Households excluded netted
Non-financial private corporations excluded included
Governments excluded included
Non-residents (entities outside Canada) excluded zero

Timing differences

The Bank uses data reported on an average-over-the-period basis (the average value of the stock of an asset over the period), whereas Statistics Canada uses data reported on an end-of-period basis (the value of the stock of an asset on the final day of the period). This results in differences between estimates derived from each source, especially when large movements in the value occur throughout the period or near the end. Although this is labelled a timing difference, any data issues between reconciling at the end of the period compared with the average will inherently be included in this calculation.


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