Canadian household debt rises to a record high

By Special to MoneySense on March 11, 2016
Estimated reading time: 2 minutes

Debt has increased 1.2% to $1.923 trillion

This article is 9 years old. Some details may be outdated.

OTTAWA – Canadian household debt rose to a new record high in the fourth quarter of last year, fuelled in large part by mortgage growth. Statistics Canada said Friday that total household credit market debt, which includes consumer credit and mortgage and non-mortgage loans, increased 1.2 per cent to $1.923 trillion at the end of last year. The total included $573.6 billion in consumer credit debt and $1.262 trillion in mortgage debt. The growth helped drive the ratio of household debt to disposable income to a new peak of 165.4 per cent in the fourth quarter, up from 164.5 per cent in the third quarter. Credit card selector tool » That means Canadian households on average held $1.65 in debt for every dollar they earned after taxes and other fees paid to government. TD Bank economist Diana Petramala said low interest rates have allowed households to take on more debt, mostly backed by mortgages, and predicted the growth in debt will outpace income growth in the first half of this year. “Canadian consumer borrowing interest rates fell once again through the start of the year, which may only encourage a further acceleration in borrowing,” she said. “While the increase in spending and borrowing will help support economic growth, households are increasingly becoming more vulnerable to a potential interest rate shock or slowdown in the housing market.” Debt repayment mistakes you’re probably making » However, Royal Bank economist Laura Cooper said the implementation of new mortgage regulations last month “may curb the appetite for mortgage loans to some extent.” The changes mean homebuyers must make larger down payments for properties over $500,000. The household debt service ratio, the obligated payments of principal and interest as a proportion of disposable income, was 13.8 per cent in the fourth quarter, compared with 13.5 per cent in the third quarter. While household debt increased, a rebound in financial assets helped drive household net worth in the quarter by 1.6 per cent to $9.479 trillion. Financial assets increased 2.2 per cent after dropping for two quarters, buttressed by a 0.7 per cent increase in non-financial assets, which includes real estate. Statistics Canada said household net worth amounted to $263,200 on a per capita basis, up 1.5 per cent from the previous quarter. Note to readers: This is a corrected story. An earlier version said there was $573.6 million in consumer credit debt.

Comments Cancel reply

Canadian couple in their first home happy the BoC held its rate.

Columns

Making sense of the Bank of Canada interest rate decision on June 4, 2025

News

BoC held its rate on June 4—here’s why

The Bank of Canada held its key rate at 2.75%, citing high uncertainty, tariffs and more.

BoC held its rate on June 4—here’s why

A Canadian family moving, thanks the BoC rate cuts, which improved mortgage affordability in Vancouver, Toronto and Hamilton

Mortgages

How much income do you need to buy a home in Canada? A look at home affordability in April 2025

A young woman surrounded by moving boxes in her new home

Mortgages

Looking for a mortgage in B.C.? Don’t limit your options to the big banks

MoneyFlex

Gen Z guide to getting more in a tough economy: How to negotiate salary, car deal, phone bills and more

From rent to hair styling, phone to internet plans, these expenses are surprisingly negotiable. How every young Canadian can...

Gen Z guide to getting more in a tough economy: How to negotiate salary, car deal, phone bills and more

A women looking over at a desk with a laptop and has her hands clasped.

News

What is a consumer proposal? How does it work?

If spiralling debt has you on the brink, a consumer proposal may be the right move. Here’s how it...

What is a consumer proposal? How does it work?

Education Money

Contributing to your grandchild’s RESPs: What grandparents need to know

Helping a grandchild pay for post-secondary education is a smart gift that keeps giving. Here’s how to maximize your...

Contributing to your grandchild’s RESPs: What grandparents need to know

Two young kids in winter clothes smile and stick out their tongues

Education Money

You opened an RESP—now what?

A registered education savings plan is the best way to save for a child’s education. Here’s how to use...

You opened an RESP—now what?

Education Money

Reducing risk in an RESP: How to invest as your kid approaches college or university

An RESP’s investment mix should evolve over time. Here’s how to focus on growing and then preserving your savings...

Reducing risk in an RESP: How to invest as your kid approaches college or university

Two young men are in the library, using the computers as they're smiling. Why? Because they're not stressed about money and they've budgeted well.

MoneyFlex

How to manage money as a student

Here are several ways you can create habits that encourage saving and smart spending so that college or university...

How to manage money as a student

Canadian household debt rises to a record high

Comments Cancel reply

Related Articles

Making sense of the Bank of Canada interest rate decision on June 4, 2025

BoC held its rate on June 4—here’s why

How much income do you need to buy a home in Canada? A look at home affordability in April 2025

Looking for a mortgage in B.C.? Don’t limit your options to the big banks

Gen Z guide to getting more in a tough economy: How to negotiate salary, car deal, phone bills and more

What is a consumer proposal? How does it work?

Contributing to your grandchild’s RESPs: What grandparents need to know

You opened an RESP—now what?

Reducing risk in an RESP: How to invest as your kid approaches college or university

How to manage money as a student