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Canadian Household Debt-to-Disposable Income Ratio

Ratio of the amount households owe compared with the amount they earn net of taxes and deductions.

Key Highlights

  • Canadian households owed approximately $1.72 for every$1.00 of disposable income earned in Q4 2020.
  • The amount owed has shown year-over-year declines every quarter since Q3 2019.
  • Despite lower interest rates, increased economic uncertainty associated with the pandemic made higher debt less attractive and contributed to the decline in the amount owed throughout 2020.
  • Residents paid down debt, which contributed to a decline in the amount owed throughout 2020.

In Q4 2020 Canadian households owed $1.72 for every $1.00 of disposable income earned.

Canadian household debt ratio has trended downwards over the last year from $1.75 cents in Q4 2019.

Although interest rates remained low and attractive for household to increase debt levels, the COVID-19 induced recession resulted in higher unemployment and economic uncertainty, that acted as a deterrent to higher household debt.

Elevated uncertainty around employment opportunities due to the COVID-19 pandemic will likely continue to influence declines in household indebtedness in upcoming quarters.