Canadian wages are growing faster than usual, but they’re failing to keep up with household spending. Statistics Canada (StatCan) data reveals household credit is once again outpacing wage growth, suggesting households are borrowing what their wages won’t provide. The growing gap raises questions about the sustainability of repaying a household debt load that now rivals the country’s annual GDP.
Canadian Household Debt Climbs To $3.23 Trillion
Canadian household debt rose 0.2% (+$7.1 billion) in February to $3.23 trillion, up 4.5% (+$138.4 billion) from last year. The majority is mortgage liabilities, which came in 4.7% higher than last year to represent $2.15 trillion of the total. The remaining $816.5 billion is consumer credit, which climbed a modest 3.9% higher than last year.
Canadian Wage Growth Improved, But Trails Household Credit
Canadian wage growth has improved in recent months, but once again fell behind credit growth. Using StatCan’s fixed-weighted average wage—which controls for composition change—annual growth is roughly 3.4% in February (it uses the SEPH which trails the LFS survey by two months). That leaves debt growing faster than the incomes used to carry it.
Living On Borrowed Time: Canadian Household Debt Outpaces Wages
The gap between total household credit and wage growth (fixed-weight average). In percentage points.
Source: StatCan; Better Dwelling.
The growth rate of Canadian wages came in nearly one percentage point below credit growth in February. An improvement from the 2.5% gap in October 2025, but nonetheless significant. Wage growth last exceeded household debt about a year ago, and that relief was brief. Before that, ultra-low rates helped to drive one of the widest debt-to-income growth gaps in the series.
Now, this growth rate gap wouldn’t necessarily be a problem if household debt were smaller, since smaller numbers can easily grow faster. However, at $3.23 trillion, it rivals GDP and dwarfs the $1.6 trillion in annualized compensation all workers in Canada made in Q4 2025. At nearly twice the size of annualized labour compensation, even similar growth rates lead to a widening gap. It’s hard to see how this isn’t a structural issue that becomes challenging to escape in an orderly fashion.
Households are borrowing to support pre-rate-hike spending, but that was also driven by excess credit stimulus—not gains in real wages. Borrowing is being used to keep up with a period of prosperity that was also fueled by borrowing.
Debt is future income spent today (plus interest), pulling forward activity. That means the present feels more prosperous than the future will, and borrowing to avoid that feeling compounds into a bigger problem down the road.
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