Canadian real estate is once again fueling household debt, with new data from Statistics Canada showing mortgages now make up a record share of total borrowing.
As of August 2025, nearly 8 in 10 dollars of household credit are tied to mortgages, a concentration that’s increasing economic risk despite slower overall borrowing.
Canadian Household Debt Tops $3.13 Trillion
Canada’s household debt climbed 0.48% in August (+$14.98 billion), reaching $3.13 trillion in total. That’s up 4.45% year-over-year, or $133 billion higher than in 2024.
While growth has slowed slightly compared to earlier this year, the total remains near historic highs. The 12-month growth rate peaked in June 2025, marking the fastest pace since April 2023 before easing over the summer months.
Even with lower borrowing costs and government efforts to spur lending, household credit appears to be cooling.
Mortgage Debt Climbs to $2.33 Trillion
Mortgage borrowing continues to dominate. Canadians owed $2.33 trillion in mortgage debt as of August 2025, up 0.50% (+$11.49 billion) from July and 4.75% (+$105.6 billion) from last year.
Although this growth is slower than pre-pandemic averages, it’s still stronger than other types of consumer credit—like credit cards and personal loans—which remain largely flat. Mortgage debt is expanding faster than most forms of borrowing, cementing housing’s role as Canada’s biggest financial driver.
Mortgages Now Represent 74.5% of Household Debt – A Record High
According to StatCan, mortgages now account for 74.5% of all household credit, the highest ratio ever recorded. Just a decade ago, that number was closer to 67%.
The 70% threshold was first surpassed in 2020, and since then, mortgage debt’s share has climbed steadily—reflecting rising home prices, longer amortizations, and dependence on real estate wealth.
This concentration is significant: it means that almost three-quarters of what Canadians owe is tied to housing, an asset class highly sensitive to interest rate changes.
Why High Mortgage Concentration Is a Risk
Economists warn that Canada’s growing reliance on mortgage debt magnifies household and economic vulnerabilities. Unlike credit cards or auto loans, mortgages can’t easily be reduced during downturns. When home prices fall, both household wealth and spending decline together—creating a ripple effect through the wider economy.
This kind of debt concentration also complicates monetary policy. Because mortgages directly respond to interest rate changes, every rate move has a disproportionate impact on both inflation and household finances.
In fact, the Bank of Canada recently acknowledged that Canada’s inflation data is distorted by the inclusion of mortgage interest costs—something few other advanced economies do. Adjusting for this could lead to more stable long-term policy, but it would also expose Canada’s mortgage market to less accommodative financial conditions.
Bottom Line
Canadian mortgage debt has reached unprecedented levels, now accounting for nearly 8 in 10 dollars of household borrowing. While total debt growth is slowing, the overwhelming reliance on housing as both a source of wealth and credit continues to pose risks to economic stability.
If home prices correct or interest rates stay elevated, Canada’s debt-heavy households could face lasting financial strain, making housing policy and rate decisions more critical than ever.
source: https://betterdwelling.com/canadian-mortgages-now-a-record-8-in-10-dollars-of-household-debt/
Subscribe to our newsletter:
Get weekly insights on home prices, real estate trends, and breaking news in Canada’s housing market.
Stay informed. Stay ahead.
Canada Housing Market 
Leave a comment