The amount of debt Canadians carry as a percentage of their disposable income grew for a fifth straight quarter at the end of last year, Statistics Canada says.
The household credit market debt-to-income ratio rose to 177.2 percent in the fourth quarter on a seasonally adjusted basis, StatCan said in a March 16 report. The ratio measures outstanding household debt—primarily mortgages, consumer credit, and non-mortgage loans—as a percentage of disposable income.
The statistic acts as a key indicator of financial health, showing how much households owe for every dollar of income available to spend, according to the federal statistics agency. The latest release shows there was $1.77 in credit market debt for each dollar of household disposable income in the fourth quarter.
While the ratio remains below the highs of 2022, “it has been drifting upwards as borrowing recovers on lower interest rates,” Bank of Montreal Chief Economist Douglas Porter noted in a March 16 post.
The household debt service ratio, which measures the proportion of a household’s disposable income that goes toward paying interest and principal on debt, edged down to 14.57 percent in the fourth quarter, from 14.61 percent in the third quarter.
Economists and financial institutions use this indicator to assess the overall health of the economy and the ability of households to manage their debt.
Porter said this ratio has been on a downward path since 2024, but noted that progress has slowed as “mortgage resets continue to add some upward pressure on household budgets.”
Taken together, the debt-to-income and debt-service ratios indicate that “household balance sheets are gradually weakening,” said TD economist Maria Solovieva.
“Even so, both measures remain below their peaks in Q3 2022, implying that consumer spending should continue to expand, though likely at a muted pace in Q1,” she wrote on March 16. “Higher gasoline prices are just beginning to weigh on household budgets. However, the drag could become more pronounced if fuel prices remain elevated for an extended period.”
StatCan also indicated that the rate of borrowing in the household credit market slowed slightly to $36.2 billion in the fourth quarter.
Mortgage demand increased to $28.7 billion, up from $23.4 billion in the third quarter, while demand for non-mortgage debt dipped to $7.5 billion from $10.6 billion in the same period.
The seasonally adjusted total of household credit market debt reached $3.2 trillion in the fourth quarter of 2025—an increase of 4.4 percent compared to the previous year.
