Canadian households among the wealthiest, but debt a 'double-edged sword'

Canadian $100 bills are counted in Toronto, Feb. 2, 2016. THE CANADIAN PRESS/Graeme Roy

Canada has the highest level of household debt to disposable income of any G7 country, Statistics Canada reported Wednesday.

The agency wrote that its 2021 census survey revealed debt-to-income ratio reached more than 180 per cent, beating the United States and Germany by a large margin. Both of those countries posted rates of 100 per cent.

That means that, for every dollar Canadian households had in disposable income, they owed about $1.85.

For contrast, in 1980, the rate was just 66 per cent.

The agency attributed Canadians’ high levels of debts to homeownership, describing housing as a “double-edged sword” – a significant contributor to the overall wealth of the middle class while resulting in “imbalances between assets and debt.”

Canadians in the middle to low income quintiles were generally spending more than they were saving through 2023. There was also a strong correlation between the saving capabilities of homeowners versus renters. Owners with mortgages were saving more than they were spending, while renters were not.

“For an average household, real estate represents about 55 per cent of their wealth and mortgages represent most of their debt—trends even more pronounced for middle-class or working-age families,” wrote the agency.

It also says Canadians over 55 held 65 per cent of total wealth in Canada, suggesting “major risks for intergenerational mobility” in decades to come.