Canadian households continued to pile on debt in Q3

CANADA — Today’s household debt numbers told a familiar story as borrowing once again outpaced disposable income growth, pushing the ever-popular debt-to-income ratio to another record high, reported RBC Economist Josh Nye.

Relative to assets and net worth, debt also edged higher but those ratios are much closer to longer run levels, painting a much less dire picture of household finances. And even with households taking on more debt, the share of income needed to service that debt was little changed in Q3, as it has been over the last decade.

Nye predicted that will change as the Bank of Canada continues to gradually raise interest rates.

“However, the prevalence of fixed rate mortgage debt means households won’t feel the increase all at once,” he said. “Rather, as today’s data showed, the debt service ratio is likely to rise only gradually. The rising cost of borrowing, and more reasonable trends in home prices, should slow credit growth in the years ahead. And with incomes expected to continue increasing, the trend in debt-to-income should flatten out—a development policymakers are keen to see.”

He added, “But even if that dynamic plays out, households will remain stuck with high debt loads—keeping financial system vulnerabilities ‘elevated’ in the years to come.”

A few highlights from the RBC report:

  • Canadian households took on an additional $29 billion in credit market debt in Q3. That reflected a seasonal rise in mortgage borrowing as well as a further increase in consumer credit.
  • Household asset values were little changed as real estate assets edged down slightly amid softer home prices. Financial assets were also close to flat despite a solid gain in equity valuations.
  • Household net worth was little changed from the previous quarter’s record high.
  • Credit market debt-to-assets and debt-to-net worth ratios both rose for a second consecutive quarter but are less than a percentage point above longer run averages.
  • The household debt-to-disposable income ratio rose by a percentage point to 171.1% in Q3. The previous quarter was revised up from 167.8% due to earlier-released disposable income revisions.
  • The household debt service ratio edged up by 0.1 percentage point to 16.9% as principal payments rose. The share of income going toward interest payments was little changed despite the Bank of Canada’s two rate hikes in Q3.


For more economic research, visit RBC’s web site at

Ronnie Wendt

Ronnie Wendt

Ronnie Wendt has been a writer/editor for more than 25 years, working in law enforcement, aviation, supply chain and the RV industry. She's not a stranger to RVs, however. She grew up camping, and still camps as many weekends as she can every year. She is the owner of In Good Company Communications and can be reached at

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