Canadian households are once again piling on debt faster than their incomes can keep up—if they ever stopped. Statistics Canada (StatCan) data show the household debt-to-income (DTI) ratio climbed for a third straight quarter in Q2 2025. It’s still below the 2021 peak, but that drop has less to do with deleveraging and more to do with population growth inflating the income side of the equation.
Canadian Household Debt Outpaces Income For Third Straight Quarter
Canadian household debt to disposable income. Seasonally adjusted percent.
Source: Statistics Canada; Better Dwelling.
Canadian household DTI continued to climb in Q2 2025, rising 1.15 points to 174.9%—the third straight quarterly increase. That means households now owe $1.75 for every $1 of disposable income, fuelled by $31.6 billion in new borrowing, including $24.6 billion in mortgage debt.
At first glance, the ratio still looks better than its 2021 peak. But that’s mostly optics. The apparent improvement conceals a rising debt burden and growing financial risk.
Canadian Population Growth Skews Debt Metrics, Masks Rising Credit Risks
Canada’s breakneck population growth is distorting key household debt metrics, including DTI. To understand why the DTI ratio appears to improve, it helps to consider:
- Mortgage debt accounts for 74% of household debt.
- High-income borrowers are the most highly indebted, using significant leverage.
- Low-income households have limited credit access as a result of higher default risk.
Canadian household DTI peaked at 186% in Q4 2021, and now sits at 174.9% in Q2 2025—a 5.8% drop. But over the same period, Canada’s population surged 8.1%, adding 1.55 million jobs and inflating aggregate income. Much of this growth came from recent immigrants and temporary residents, who boosted income totals but contributed little to debt… at least for now.
Canadian Household Debt Is Growing Much Faster Than Income
Canadian household credit market debt and disposable income per capita (left axis, Canadian dollars). Quarterly population growth (right axis, %).
Source: Statistics Canada; Better Dwelling.
Looking at debt and income in dollar terms tells a different story. In Q2 2025, credit market debt grew 0.93%, over three times faster than disposable income, which rose just 0.27%. Since the peak in Q4 2021, debt has grown 79.9% faster than income.
And that’s without adjusting for population composition. Much of the income gain came from population growth—newcomers who contributed to disposable income totals but haven’t yet taken on much household debt.
Superficial improvements in household debt metrics, driven by population growth, mask the real risks. Higher aggregate income makes it easier for policymakers to finance deficits, with the expectation that a larger population will generate more future tax revenue. However, it conceals the fact that households are more indebted, face greater default risk, and are more exposed to interest rate shocks and weaker consumption.
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