Recent data from Statistics Canada reveals a concerning trend for Canadian households, as the country’s debt-to-income ratio climbed to 176.7% last quarter. This means for every dollar of household disposable income, Canadians owed $1.77 in credit market debt. This marks the fourth consecutive quarter of growth in this ratio, highlighting a potential cause for concern regarding the financial health of households across the nation.

Continuous Rise in Household Debt

Statistics Canada has reported that the country’s debt-to-income ratio has been increasing steadily for the past four quarters. For instance, the ratio of household credit market debt as a proportion of household disposable income was 176.7% on a seasonally adjusted basis in the third quarter, a slight increase from 176.3% in the second quarter. This trend indicates that Canadians’ debt is growing at a faster rate than their income.

The Household Debt Service Ratio

Another important metric that Statistics Canada highlights is the household debt service ratio. This ratio is calculated by dividing the total obligated payments of principal and interest on credit market debt by the household disposable income. In the third quarter, this ratio was 14.64%, slightly down from 14.68% in the second quarter. While a decrease in this ratio may seem like a positive sign, the overall high percentage still underscores that a significant portion of household income is being used to service debt.

Trends in Credit Market Borrowing

The pace of household credit market borrowing did show a slight decrease in the third quarter, easing to a seasonally adjusted $33.5-billion, compared to $34.5-billion in the second quarter. This slowing pace of borrowing could be a positive sign for the financial stability of Canadian households. However, it’s important to note that the total stock of household credit market debt still increased by 1.0% to nearly $3.2-trillion in the third quarter of 2025, with mortgages making up almost 75% of the total.

Mortgage and Non-Mortgage Debt

The demand for mortgages dropped to $23.4-billion in the third quarter from $27.8-billion in the second quarter. On the other hand, the demand for non-mortgage debt saw a surge, increasing to $10.1-billion from $6.7-billion in the previous quarter. This shift in borrowing behaviour might suggest a change in consumer confidence or spending habits, which could have wider implications for the economy.

Overall, while there are some positive signs like the slowing pace of borrowing and slight decrease in the household debt service ratio, the continuous rise in the debt-to-income ratio is a matter of concern. It’s crucial for Canadians and policymakers to be aware of these trends and take appropriate measures to promote financial health and stability.

Ethan Radcliffe

Ethan Radcliffe is a senior reporter and digital editor at The Toronto Insider, specializing in Canadian federal policy, GTA urban development, and national economic trends. With over a decade of experience in North American journalism, Ethan focuses on translating complex legislative and economic developments into clear, accessible reporting for Canadian readers. Ethan’s work emphasizes policy analysis, government accountability, and data-driven reporting, with a strong focus on how federal and provincial decisions impact communities across the Greater Toronto Area and beyond. He has covered infrastructure planning, housing policy, fiscal strategy, and regulatory changes affecting Canadian households and businesses. A graduate of Toronto Metropolitan University’s School of Journalism, Ethan brings expertise in investigative reporting, long-form analysis, editorial standards, and digital publishing best practices. His reporting is guided by verifiable sources, public records, and transparent sourcing. In addition to reporting, Ethan has experience in newsroom editing, fact-checking workflows, SEO-informed journalism, and audience analytics, ensuring stories meet both editorial integrity standards and modern digital discoverability requirements. Ethan is committed to objective, fact-driven journalism and adheres to established ethical guidelines, prioritizing accuracy, clarity, and public trust in all reporting.

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