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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

  • In Q1 2021, Canadian households owed approximately $1.70 for every $1.00 of disposable income earned.
  • This ratio has declined in every quarter since Q3 2019.
  • Despite lower interest rates which make debt more attractive, counterbalancing factors such as economic uncertainty associated with the pandemic have contributed to the decline in the household debt to disposable income ratio throughout 2020 and into 2021.

In Q1 2021, Canadian households owed $1.70 for every $1.00 of disposable income earned.

Canadian household debt ratio has trended downwards over the last eight quarters, despite the prevalence of historically low interest rates which make debt more attractive.

Some factors which may have contributed to the lower household debt ratio includes uncertainty associated with the COVID-19 induced recession and higher unemployment.

In addition, with lower interest rates, existing debt increases at a slower rate.