It’s hard not to be worried when we see Canadian household debt creeping up once again. According to Statistics Canada, the amount we owe in relation to our income ticked higher in the first quarter of 2025 — a clear sign that borrowing is growing faster than our ability to pay it back.
The ratio of household credit market debt to disposable income jumped to 173.9% from 173.5% in the last quarter of 2024. That means for every dollar of income we bring in, we now owe nearly $1.74. It’s a dramatic number — a small rise on the surface, perhaps, but a vivid indicator that we’re borrowing more just to keep up.
Meanwhile, total household credit market debt crossed $3.07 trillion in the first quarter — up 1.1% from the previous quarter — with nearly 75% of it tied up in mortgage borrowing. So much for the notion that we’re borrowing less. It seems we’re not; we’re just adding more mortgage debt on top of what we already owe.
Some might find it comforting that the debt service ratio — the amount we pay in principal and interest relative to our income — remained steady at 14.4%. But we shouldn’t be deceived by that. The ratio staying flat could reflect lower borrowing conditions or a temporary pause in borrowing, not a fundamental improvement in financial health.
It’s worth noting borrowing is slowing — total borrowing fell from $41.6 billion in the fourth quarter of 2024 to $34.5 billion in the first quarter of 2025 — but this slowdown comes against a backdrop of growing financial pressure.
For Canadian families, this highlights a tough reality. Rising debt signals vulnerability — to future rate hikes, to job losses, or to an economic downturn. If borrowing starts to become more expensive or income drops, many will find it hard to keep their heads above water.
We need a frank conversation about financial health in this country. Rising household debt isn’t a trend we can ignore. It’s a vulnerability — a weak spot in an otherwise strong economic picture — that policy makers, financial institutions, and Canadian families should all be addressing. Otherwise, we may find ourselves paying a heavy price when conditions become less favorable.
