Canada has the highest household debt to disposable income ratio of any G7 country. Statistics Canada reported on Wednesday.
The agency wrote that its 2021 census showed that the debt-to-income ratio reached more than 180 percent, significantly surpassing the United States and Germany. Both countries recorded rates of 100 percent.
That means Canadian households owed about $1.85 for every dollar of disposable income.
In contrast, the rate in 1980 was only 66 percent.
The agency attributed Canadians’ high levels of debt to home ownership, describing housing as a “double-edged sword” – a significant contributor to the middle class’s overall wealth while also leading to “imbalances between wealth and debt.”
Canadians in the middle to low income quintile generally spent more than they saved through 2023. There was also a strong correlation between the ability of homeowners and renters to save. Homeowners with mortgages saved more than they spent, but renters did not.
“For the average household, real estate represents about 55 percent of its wealth and mortgages represent the majority of its debt – this trend is even more pronounced among middle-class or working-age families,” the agency wrote.
It also said Canadians over 55 owned over 65 per cent of the total wealth in Canada, suggesting “major risks to intergenerational mobility” in the coming decades.
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