Canadians Owe $1.76 for Every Dollar Earned: Statistics Canada

Money is removed from a bank machine in a photo illustration in Montreal, on May 30, 2016. The Canadian Press/Ryan Remiorz

Household debt in Canada has reached $3 trillion, with Canadians owing $1.76 for each dollar of disposable income they earn, Statistics Canada says.

“By 2024, in August, household debt had reached nearly $3 trillion though the relative debt level slightly decreased to $1.76 for every dollar of disposable income reflecting higher income growth,” StatCan assistant chief statistician Jennifer Withington told the House of Commons Industry Committee on Nov. 7, as first covered by Blacklock’s Reporter.

Withington said outstanding debt among Canadian households reached nearly $2.4 trillion in 2019, representing a debt level of $1.80 for every dollar of disposable income. Credit card debt comprised one-tenth of all borrowings from banks through lines of credit, with home equity lines of credit accounting for nearly half of the total, she said.

The higher costs of goods and services are likely to “further challenge vulnerable households,” Withington said, adding that credit card balances reached $104 billion in 2023.

A Statistics Canada report from February 2024 found that Canada’s focus on consumer spending as a source of economic growth has contributed to greater debt burdens, leading the country to have the highest household debt in the G7. The debt-to-disposable income ratio in the United States and Germany is roughly 100 percent, compared to Canada’s 180 percent, the report said.

Household spending has been the main contributor of economic growth in Canada since 2015, the report said, noting that residential investment has become increasingly significant since 2021. In contrast, business investment has “not made an important contribution to growth in the last decade,” it said.

In light of higher interest rates, this could result in reduced incentives for business investment and increased household spending on debt servicing, the report said.

A 2017 Parliamentary Budget Office report found that household debt rates have been nearly twice as high as those recorded a generation ago. It said debts were at “the highest level” since early 1990, a period during which household debt was just shy of 90 percent of disposable income.

The report also found that 65 percent of household debt was in mortgages, followed by consumer credit charges at 29 percent and non-mortgage loans at 6 percent.

“Household debt-servicing capacity will become stretched even further,” the report said. “Based on Budget Office projection, the financial vulnerability of the average Canadian household would rise to levels beyond historical experience.”

A 2019 report by the Financial Consumer Agency of Canada found homeowners typically owe an average of $70,000 on lines of credit.

“Rapid expansion was driven primarily by low interest rates and rising housing prices,” said the report.