The fast climb of Canadian debt

Seven interest rate hikes later, personal finances have seen better days.

As Canadians took on more loans (mortgages, credit cards, etc.) last quarter, the country’s household debt-to-income ratio rose to 183.3% — meaning that for every dollar of household disposable income, there’s $1.83 in debt—nearing the 185% record seen in 2018. 

Why it matters: Canadian households have long been some of the most indebted in the world, which is fine and good as long as the debt is used to build wealth, but these days household finances are being stretched between the rising costs of living and borrowing. 

  • Canadians made ~$230 billion in debt payments last quarter (a record-setting quarterly increase of 5.6%), with both the principal loan amounts and interest payments now accounting for how ~14% of all disposable income is spent.

Zoom out: Meanwhile, the national net worth dropped by 3.3% (in large part thanks to faltering residential real estate values), marking two straight quarters of decline—the last time that happened in Canada was during the *gulp* 2008 financial crisis