Canadian Household Debt-to-Disposable Income Ratio
Ratio of the amount households owe compared with the amount they earn net of taxes and deductions.
- 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.