Peel Region homepage
Peel Region

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 $1.69 for every $1.00 of disposable income earned in Q2 2020. This is the lowest it has been since Q2 2015.
  • Bank of Canada’s overnight interest rate remained at a historic low of 0.25 per cent in Q2 2020.
  • Elevated uncertainty around employment opportunities due to the COVID-19 pandemic will likely influence continued lowering in household indebtedness in upcoming quarters.

The amount owed by Canadian households compared with the amount of disposable income earned (debt-to-disposable income ratio) fell from $1.76 in Q2 2019 to $1.68 in Q2 2020, the lowest Q2 ratio in five years.

The decline in Q2 2020 occurred amidst two counterbalancing influences:

In Q2 2020, Canadian consumers responded to the increased uncertainties by reducing debt.

In the short-run, the reduction of the debt-to-disposable income ratio is likely to persist given continued uncertainties.

Over the medium-term, the change in the Canadian debt-to-disposable income ratio is more uncertain, given that the low-interest rate environment is expected to remain in place and may encourage some Canadians to increase debt levels.