Canada’s household debt climbed to an unprecedented $2.6 trillion by the end of 2025, driven largely by rising mortgage balances and increased borrowing activity, according to a new report released by TransUnion Canada.
The credit reporting agency said total outstanding balances across all consumer credit products rose 4.3 percent year-over-year an increase of $107.2 billion compared to the end of 2024.
Mortgage borrowing accounted for the bulk of the rise. Outstanding mortgage balances grew 4.3 percent to reach $1.91 trillion. The report noted that mortgage originations jumped 14.5 percent year-over-year as many homeowners moved to refinance or renew their loans ahead of expected interest rate cuts.
Throughout much of the final quarter of 2025, the Bank of Canada held its benchmark policy rate at 2.25 percent. In December, the central bank indicated the rate was “about the right level” to maintain inflation near its two percent target while supporting economic growth, and it maintained that stance again the following month.
Borrowers are also adjusting their strategies. According to the report, more Canadians are opting for shorter fixed-term mortgages particularly one- and three-year terms rather than traditional longer-term agreements. The shift reflects uncertainty over the future path of interest rates, with households seeking flexibility until monetary conditions stabilize.
The surge in borrowing has pushed up average mortgage amounts. New mortgages averaged $367,669 in the fourth quarter of 2025, a 4.2 percent increase from a year earlier. The trend has been especially noticeable in high-cost markets such as Toronto and Vancouver.
Meanwhile, the average outstanding mortgage balance rose 4.4 percent to $288,720, reflecting continued high home prices and borrowers stretching finances to retain property ownership in expensive regions.
Monthly payments are rising accordingly. The average minimum mortgage payment reached $2,513 in Q4 2025, up 4.2 percent from the same period in 2024.
Beyond mortgages, non-mortgage debt increased 4.4 percent year-over-year, with total balances reaching approximately $685 billion. The average non-mortgage debt per consumer climbed to $27,444.
Credit card balances rose modestly, with the average consumer carrying $4,763 in Q4 2025 a 1.74 percent increase from the previous year. Installment loan balances increased 4 percent to $23,576.
Auto loan balances also continued their upward trajectory, averaging $30,924 compared with $29,656 a year earlier. Lines of credit saw average balances grow from $35,190 in 2024 to $36,468 in 2025, although minimum payments on lines of credit declined 5.6 percent year-over-year — the only major credit category to see a drop in required payments.
Despite higher debt levels and rising monthly obligations, the report offered some reassurance. Consumer credit delinquencies remained broadly stable in the fourth quarter of 2025. While some products showed modest year-over-year increases in late payments, the pace of deterioration has slowed compared to previous years.
TransUnion said this suggests both borrowers and lenders may be adapting to the current economic environment, potentially signaling that delinquency rates are nearing a plateau.
As borrowing costs stabilize and Canadians continue to adjust their financial strategies, household debt remains elevated underscoring the delicate balance between economic growth, housing affordability, and financial resilience in 2026.
