Canadian Rate Cuts May Not Do Much, Since Household Savings Fell To A 59+ Year Low

Savings? Canadian households don’t want to hear about your exotic German habits. Statistics Canada (Stat Can) numbers show the unadjusted household savings rate had an abysmal Q1 in 2019. The rate of household savings made the weakest Q1 print in over 59 years of data. Combine that with higher debt loads, and even a rate cut is going to have a difficult time working with this.

Households Savings For Q1 Fall To 59+ Year Low

Canadian households are saving a lot less these days. The unadjusted household savings rate fell to 0.7% in Q1 2019, down 78% from the quarter before. More important, this number fell 63.15% compared to the same quarter last year. The quarter-over-quarter decline is typical, but the annual drop is far from it.

Canadian Household Savings Rate Q1

The unadjusted household savings rate for Canadians in Q1.

Source: Statistics Canada, Better Dwelling.

Household savings have been on the slide, but it rarely reaches this point. The most recent quarter is the lowest rate of savings for Q1 since at least 1960. More recently, we’ve been seeing the 12-month change decelerate once again. It’s not an encouraging sign when savings rates top out at the same time as credit growth. You know, since those savings need to be diverted to handle new debt servicing.

Canadian Household Savings Rate Change

The year-over-year percent change in the unadjusted household savings rate for Canadians.

Source: Statistics Canada, Better Dwelling.

Canadian Households Only Put Aside $2.2 Billion In Savings Last Quarter

Canadians are putting away the same amount of cash they did 40 years ago, with a much bigger population. The unadjusted household savings rate works out $2.2 billion for the quarter, down 78% from a quarter before. Savings for Q1 were 59.3% lower than the same quarter a year ago. The last time a Q1 came in this light was 1975, when the population was 36.7% lower. If you’re still convinced it’s a large number, it works out to around $60 per capita. Not exactly an amount that’s going to be easy to try to divert to stimulate the economy.

Canadian Household Savings Q1

The Q1 dollar amount of household savings per quarter across Canada.

Source: Statistics Canada, Better Dwelling.

The household savings rate brings up a few issues, but most notable to real estate is how it works with a rate cut. Cheap debt is cheap, but requires diverting existing income to debt service income. Rate cuts, like the 2015 cut, are most effective at curbing high savings rates. In this case, the next cut is likely to hit at a time where the savings rate is falling.

Like this post? Like us on Facebook for the next one in your feed.



We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Rob 3 years ago

    Why did it drop so low after 2015? I assumed it would have dropped after the Great Recession?

    • Tia Wolfe 3 years ago

      Long story short, house buying binge facilitated by the BOC’s gratuitous rate cut. They cut rates to lower savings rates, and penalize savers to “stimulate” the economy.

      If you study the history of the BOC, they have an issue like this every 30-40 years. That is, they take one policy like inflation targeting, and drive it into the ground. People respond by taking their money out of Canadian dollars (the goal was to get them to borrow more), and sink it into inflation hedges like real estate. This was the cause of the 1980 bubbles, BOC excessive breakdown of control, which people responded to with property speculation. Eventually this creates so much risk, foreign investors disappear for 10 or so years.

  • GTA Landlord 3 years ago

    $60 per person should be enough to get Toronto to a billion per condo. We gud.

  • Audrey Rowe 3 years ago

    Make no mistake, this next rate cut isn’t about stimulus. It’s about making sure people don’t lose their homes.

    Half of Canadians are $200 from insolvency. The other half already have assets, and need people to dump there’s on.

  • GLM 3 years ago

    there is no escaping what is coming to the Canadian economy, everyone who is in denial better wake up now before its to late and it already might be.

    • Carlton 3 years ago

      No kidding, after pulling money from HELOCs to make ends meet and servicing debt, where would people get money to save?

      Home prices are up almost 3x in the last 12 years while income has been stagnant. I wonder how much longer the average Canadian can continue to spend 1.80 while only making a buck?

  • MH 3 years ago

    Numbers, schmumbers… Will you stop your scaremongering already?

    Who needs savings when you can borrow your downpayment and live happily ever after? I’m sure Poloz and Siddall are already working on something funded by taxpayers to make it more affordable and as a bonus to show those few remaining stupid savers their place.

  • Curious Bear 3 years ago

    Does the savings rate include contributions to registered accounts, such as RRSPs and TFSAs), or the principal portion of mortgage payments?

    I tried looking for the definition on the Stats Canada website but wasn’t able to find definition/the answer to my question.


    • WW 3 years ago

      Here’s the most disturbing part. It’s disposable income less the amount of money spent. So in reality, it’s most likely an overreport.

      • Craig 3 years ago

        I live in the GVRD and the street where I work has been under construction more on than off for the last 5 years. Two Pit Stop portable toilets are across from our Front Door. A homeless man moved into one of them today, parking his shopping cart in the “driveway” beside the toilet. He looked happy.

        Sad to think this is one of the richest men in Canada: he’s totally broke, no debt. Probably 1/2 million dollars richer than the man in the Mercedes parked beside him.

  • Derek Bowman 3 years ago

    I started house hunting last year. Sounds like ill be able to afford a nicer neighbourhood soon… RIP casualties of poorly managed funds.

  • Zenity 3 years ago

    Young families cannot save after wealth transfer via taxation and high housing costs. A sound economic policy is to give young people resources (money) so they can produce goods and services. The worst economic policy is to drain all income from young people and give it to none productive retirees.

    I feel Canada is screwing itself and young people are too cowardly to speak up.

    • Not Yet Old Guy 3 years ago

      You’ve got too much hatred for older people. Stop vaping your tattoo ink, work a little harder at increasing your income streams and you’ll be fine.

Comments are closed.