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 $1.73 for every$1.00 of disposable income earned in Q3 2020.
- The amount owed has decreased every quarter since Q3 2019.
- Increased economic uncertainty and higher unemployment associated with the pandemic contributed to the decline in the amount owed throughout 2020.
- Canadian household debt is likely to continue to decline as the pandemic and associated uncertainties continue.
In Q3 2020 Canadian households owed $1.73 for every $1.00 of disposable income earned as households reduced their debt levels for the third consecutive quarter.
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 may have 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.