This marks four consecutive quarters of growth, bringing the total household net worth to nearly $1.2 trillion in 2024.
But rising debt levels and slower income growth have increased pressure on household balance sheets as interest rates fall.
Household financial assets rose 2.0% (+$215.1 billion) in the fourth quarter to $10.8 trillion, setting record highs for the fifth consecutive quarter. Earnings are driven by stronger domestic stocks – the S&P Composite Index rose 3.0%, outperforming the S&P 500 (+2.1%). The weaker Canadian dollar further increases the value of foreign investment.
On the real estate side, residential properties increased by 0.6% to $8.3.5 trillion, recovering after a mid-year decline. Resale prices rose by an average of $30,000 to more than $700,000 compared to the previous quarter, while home sales rose by 9.5% in the fourth quarter.
Household credit market debt
Debt exceeds $3 trillion as borrowing accelerates
Canadian household credit market debt exceeded C$3 trillion in the fourth quarter for the first time, with borrowings reaching C$40 billion, the highest level since mid-2022. Mortgage led the way, climbing to $29 billion from the third quarter as lower interest rates and increased consumer confidence prompted lower demand.
Non-collateralized debt, including credit cards and personal loans, also soared, reaching $37.9 billion in 2024, up from $23.6 billion in 2023. This marks a 31.8% increase in borrowing in the previous year, although it remains below 28.2% in 2022.
Debt-income ratio increases, but debt sales cost decreases
As debt rises faster than income, the household debt-income ratio accounts for 172.8% in the fourth quarter, meaning Canadians owe $1.73 per dollar of disposable income.
However, the debt repayment ratio (part of the income involving interest and principal payments) has lowered its lowest level since 2020 to 14.35%.
“As income growth rate exceeds debt, the debt ratio has been rising over the past two years, while interest rates are higher, reducing the attractiveness of borrowing,” said Charles St-Arnaud, chief economist at the Central Alberta. “Nevertheless, at 172.8%, household debt is still rising, with great concern and risk to the Canadian economy.”
Meanwhile, household savings rate fell to 6.1% in the fourth quarter, down from 7.3% in the third quarter, as spending rose 2.1%, surpassing the growth in disposable income (+1.1%). However, investment activity remains strong, with the joint acquisition of mutual funds reaching $52.6 billion, the highest level since 2021.
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Charles St. Arnold Economic Data Economic Indicators Household Debt Household Net Asset Savings Rate Savings Rate Statcan Country Account Balance Canada
Last modified: March 13, 2025
