Canadian Household Debt Surpasses $3 Trillion For The First Time Ever

Canadian household debt is back, but a little different this time. Statistics Canada (Stat Can) data shows households owed more than $3 trillion in September, a new record high. Both mortgage and consumer credit growth accelerated, the latter at a faster pace. An unusual trend that indicates households are gobbling up credit, but less of it’s for housing these days. 

Canadians Household Debt Surpasses $3 Trillion For The First-Time Ever

Canadian household debt outstanding at institutional lenders, in trillions of dollars.

Source: Statistics Canada; Better Dwelling. 

Canadian household debt is once again accelerating to new highs. Household debt grew 0.4% (+$11.5 billion) to $3.0 trillion in September. Annual growth climbed to 3.6% (+$104.5 billion), with both the monthly and annual rate showing acceleration similar to the Spring, which is a little odd going into what’s traditionally a slow season. 

Canadian Mortgage Borrowing Accelerates, But Remains A Smaller Share of Borrowing

Mortgages still represent the majority of debt, but it was underrepresented when it came to monthly growth. Outstanding mortgage credit climbed 0.3% (+$7.4 billion) to $2.2 trillion in September. This helped to push annual growth to 3.5% (+$75.2 billion), accelerating but it remains muted. Total residential mortgage credit represents 73% of household debt, but just 64% of the month’s growth.

Canadian Consumer Debt Continues To Outpace Mortgage Borrowing

Annual growth of consumer and mortgage debt owed by Canadian households, in percentage points.

Source: Statistics Canada; Better Dwelling. 

Non-mortgage credit gained more ground as households racked up more consumer debt, like credit card balances. The segment advanced 0.5% (+$4.2 billion) to $776.0 billion in September, up 4.0% (+$30.2 billion) from last year. An uptick to insolvencies and rising unemployment indicates this is likely more people borrowing to make ends meet, than financing a Skidoo. 

The return of debt accumulation is expected as the Bank of Canada (BoC) kicks off the easing cycle. This data proceeds the central bank’s double rate cuts in October, which helped to motivate a substantial uptick in home buying. Consequently, borrowing is expected to rise at a faster rate. Though it’s worth remembering that rate cuts back in the Spring motivate an uptick in borrowing, but it reverted just a few months later once the FOMO died down.