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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 $1.73 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.