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How Canada has taken on more mortgage debt than any other G7 nation, explained in 5 charts


With consecutive interest rate hikes across G7 nations, borrowing is getting more expensive for those looking to take on a mortgage.

But Canada may be facing more challenges than its G7 peers. looks at recent data by the intergovernmental Organisation for Economic Co-operation and Development (OECD) to analyze where Canada stands in comparison with other G7 nations when it comes to housing affordability, housing prices, and indebtedness.

Central banks in G7 nations have been aggressive in addressing the rising cost of living through consecutive interest rate hikes.

High interest rates typically would mean high debt servicing costs, which eventually increase the cost of everything—from mortgages to credit cards and loans. The thought behind the hike is to discourage consumers from spending. To address the cost of living crisis, the Bank of Canada steadily raised interest rates, reaching 3.75 per cent last month, from just 0.25 per cent in January this year.


When compared with other G7 nations, Canada has the most expensive housing market.

Data from OECD shows that the price-to-income ratio—also known as the measure of affordability—remained the highest for Canada, followed by Germany.

According to the quarterly data released by OECD, Canada's ratio index reached 148.16 in the second quarter of 2022, the highest amongst G7 nations, which means that housing prices grew at a rate of 48 per cent faster than income since 2015. By comparison, house prices in the U.S. grew roughly 40 per cent faster than incomes since 2015.

In a virtual conference in March this year, Sharon Kozicki, the deputy governor with the Bank of Canada, said that Canadian households that have taken out mortgages with high loan-to-income ratios probably aren’t the ones who have a lot of cash in their bank accounts.

She said rising mortgages can trigger a slowdown in household spending and if enough of them reduce spending, it could impact the entire economy, resulting in slow growth and increased unemployment.

“A drop in house prices could worsen these effects,” she said.


Early in the pandemic, higher savings, and historically low interest rates encouraged some Canadians to buy homes. The buying pattern also shifted with people working remotely during the pandemic, which encouraged many Canadians to seek homes in the suburbs, where houses were larger and more affordable. A high disposable income further led to a surge in demand for home mortgages.

In the current high-interest rate environment, higher mortgage rates have contributed to a sharp decline in housing activity, leading to a decline in house prices. According to Wowa’s latest housing market report, average home prices in Canada have fallen by 22 per cent in the span of 7 months.

But the cooling housing market in Canada should not be mistaken for increasing affordability, warned Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada in a recent press release.

She said affordability depended not just on home prices, but also on monthly payment obligations for a mortgage.“Higher interest rates coupled with high inflation can really stretch a consumer’s monthly expenditure, while many could find it difficult to qualify for a mortgage,” she said.

But despite cooling markets, recent data released by OECD shows that Canada has the highest nominal housing price. According to the annual data released by OECD, the ratio index for Canada grew 59 per cent since 2015, the highest jump recorded by any G7 nation, followed closely by Germany, which showed an annual jump of 58 per cent since 2015.

In the second quarter of 2022, Canada’s nominal house pricing index was 183.9, followed by the U.S. with a price index of 182


Due to the soaring housing prices during the pandemic, Canadians took on more mortgage debt in order to pay for a home.

Data from OECD shows that Canadians remain the most indebted in G7 nations and tend to take on more household debt than their G7 peers.

In 2021—the most recent year for which data are available for all countries—household debt in Canada was 185 per cent of disposable income.

In 2020, household debt in Canada was equivalent to 177.3 per cent of disposable income. In comparison, the U.K. has the second-highest household debt at 148 per cent. In comparison to OECD countries, which ranks 38 countries, Canada ranks ninth after countries such as Denmark and Norway that top the list with 255 per cent and 241 per cent of disposable income with household debt, respectively.

Kozicki said high indebtedness amongst Canadians could amplify the impact of interest rates. An additional concern is that a growing share of new mortgages also has variable rates, which tend to fluctuate with the bank’s policy interest rates. Top Stories

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