Canadian household net worth climbs as assets gain, but debt levels also rising

Canadian households saw their net worth grow by $236.3 billion (+1.4%) in the fourth quarter of 2024, pushing total household wealth to $17.5 trillion, according to Statistics Canada.

This marks four consecutive quarters of growth, bringing the total increase in household net worth to nearly $1.2 trillion over 2024.

However, rising debt levels and slowing income growth added pressure to household balance sheets, as borrowing accelerated amid falling interest rates.

Household financial assets grew 2.0% (+$215.1 billion) in Q4, reaching $10.8 trillion, a record high for the fifth straight quarter. The gains were driven by stronger domestic equities—the S&P/TSX Composite Index rose 3.0%, outperforming the S&P 500 (+2.1%). A weaker Canadian dollar further boosted the value of foreign investments.

On the real estate side, the value of residential property increased 0.6% to $8.35 trillion, recovering after declines in the middle of the year. The average resale price rose $30,000 from the previous quarter, exceeding $700,000, while home sales jumped 9.5% in Q4.

Household credit market debt

Debt surpasses $3 trillion as borrowing accelerates

For the first time, Canadian household credit market debt exceeded $3 trillion in Q4, with borrowing reaching $40 billion, the highest level since mid-2022. Mortgage borrowing led the way, climbing $5.3 billion from Q3 to $29 billion, as lower rates and improved consumer confidence drove demand.

Non-mortgage debt, including credit cards and personal loans, also surged, reaching $37.9 billion in 2024, up from $23.6 billion in 2023. This marks a 31.8% increase in borrowing from the previous year, though still 28.2% below 2022 levels.

Debt-to-income ratio edges up, but debt service costs decline

With debt rising faster than income, the household debt-to-income ratio ticked up to 172.8% in Q4, meaning Canadians owed $1.73 for every dollar of disposable income.

However, the debt service ratio—the portion of income going toward interest and principal payments—fell to 14.35%, its lowest level since 2020, thanks to declining interest rates.

“The indebtedness ratio had been improving over the past two years as income grew faster than debt, with higher interest rates reducing the attractiveness of borrowing,” noted Charles St-Arnaud, chief economist at Alberta Central. “Nevertheless, at 172.8%, household indebtedness remains elevated and a significant concern and risk for the Canadian economy.”

Meanwhile, the household savings rate dipped to 6.1% in Q4, down from 7.3% in Q3, as spending grew 2.1%, outpacing disposable income gains (+1.1%). However, investment activity remained strong, with net acquisitions of mutual fund shares hitting $52.6 billion—the highest level since 2021.

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