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The Bottom Line:

Canadian household balance sheets remain resilient in Q2 despite uncertainties around trade policies and a more volatile stock market, with household net worth eking out a small gain. The debt-servicing ratio is still elevated, ticked slightly upward, and net worth continues to hover near record highs, with growth edging higher.

Still, Statistics Canada noted that gains were likely (again) not evenly distributed across households – most of the net wealth gains came from a rise in financial assets as equity markets posted large gains after a weak Q1, and the top 20% of the wealth distribution own almost 70% of financial assets.

Housing weighed on wealth in Q2 as prices slipped while debt levels continued to rise, but market activity is expected to gradually recover through the end of 2025. Tariff uncertainties continued to add strain by threatening to push up import prices and increasing equity market volatility, although the worst-case scenarios for now have not developed. Meanwhile, business investment and softer labour market conditions could further restrain personal income gains and net worth growth.

Data recap/the details:

• Canada’s debt-servicing ratio was little changed at 14.4% in the second quarter of 2025, remaining below the 15.1% peak reached in 2023 and holding (roughly) steady for a third consecutive quarter. The ratio tracks the share of household income required for debt payments and is expected to move higher as 4- and 5-year fixed-rate mortgages set at pandemic lows continue to renew at elevated rates. These increases should remain manageable under our base case, although that is contingent on the unemployment rate not rising significantly further. 

• Household credit market debt edged up 1% in Q2 to $3.1 trillion, with mortgage borrowing still expanding, albeit at a slower pace amid a cooler housing market. This lifted the debt-to-disposable-income ratio to 174.9% from 173.7% in Q2, as debt growth continued to outpace income gains of just 0.3%.

• Household net worth expanded by 1.5% in Q2, reaching $17.9 trillion, supported by much stronger equity market gains. Financial asset values rose in line with the S&P/TSX Composite, which climbed 7.8% after a modest 0.8% increase in Q1.

• Non-financial assets growth, by contrast, moved lower as real estate values softened. The CREA’s MLS Home Price Index declined 1.2% in Q2, reversing the prior quarter’s increase. Still, with market confidence gradually improving, housing activity is expected to recover modestly in the second half of 2025 and build further momentum into 2026.

• The household savings rate eased to 5% in Q2 after holding steady in Q1, consistent with robust spending and softening labour markets. Looking ahead, we expect consumption to cool and the savings rate to remain broadly unchanged toward the end of the year.

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  About the Author

  Abbey Xu is an economist at RBC. She is a member of the macroeconomic analysis group, focusing on macroeconomic forecasting models and providing timely analysis and updates on economic trends.

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