The previous year has been a challenging time for many because of COVID-19.
But at the end of the day, Canadian households became richer in 2020, according to economists with two of the biggest banks in the country.
RBC and TD economists say Canadians emerged with more wealth from the pandemic year. However, the other side of the coin shows that mortgage debt also increased in 2020.
RBC Economics and TD Economics released separate reports Friday (March 12) about Canadian household wealth.
Rannella Billy-Ochieng of RBC cited the following:
- Currency and deposit holdings in 2020 increased a $205 billion in over the previous year;
- Government transfers to household increased by $117 billion;
- Net household equity in real estate rose by $531 billion last year;
- Stock markets boosted end-of-year financial asset holdings by $291 billion compared to 2019;
- Mortgage debt in 2020 rose by $110 billion over the previous year.
In the report, Billy-Ochieng noted that households possess a lot of purchasing power for the current year.
“Canadians are poised to quickly deploy spending as the economy gradually reopens in 2021,” the RBC economist wrote.
However, Billy-Ochieng also pointed out that a huge number of Canadians remain unemployed.
As of February 2021, the RBC economist noted that the unemployment rate stood at 8.2 per cent.
In a separate report, TD economist Ksenia Bushmeneva wrote that household wealth increased 3.7 per cent in the fourth quarter of 2020.
With this increase, household wealth at the end of year stood 9.3 per cent above 2019.
Bushmeneva cited the following 2020 fourth quarter numbers:
- The value of non-financial assets, mainly real estate and land, rose by three per cent in the fourth of 2020 from the previous quarter;
- The value of financial assets by Canadian households increased 3.7 per cent in the last quarter of 2020;
- The other side of the balance sheet shows that total liabilities rose by 1.5 per cent.
- Mortgage credit increased by 2.1 per cent.
- Compared to 2019, mortgage balances at the end of 2020 were seven per cent higher.
- Meanwhile, outstanding consumer credit balances were 2.5 per cent lower.
“Despite all odds, households have ended 2020 in better financial position than where they were at the start of the health crisis,” Bushmeneva wrote.
“Significant gains in asset values, payment deferrals, government income supports and a drop in consumer spending, have all helped households build significant wealth and savings cushions last year,” the TD economist added.
This story originally appeared in the Georgia Straight.