Canadian Analysis

The Bottom Line

Canadian household balance sheets remained resilient in Q3, with household net worth growing at a faster pace than in Q2 driven by robust financial asset gains. The debt-servicing ratio ticked slightly lower from last quarter after an upward revision to Q2.

Still, wealth gains are likely, again, not evenly distributed – Statistics Canada noted that the increase in net wealth was led by strong gains in financial asset values, and the top 20% of the wealth distribution holds nearly 70% of all financial assets. That is broadly consistent with earlier reports showing the household wealth gap widening in Q2.

Housing continued to weigh on wealth in Q3 as prices declined again and debt levels rose. However, encouraging signs emerged elsewhere in the economy, with Q3 GDP showing recovered activity from Q2 lows and the unemployment rate ticking lower in October and November. These improvements suggest that a broader recovery should gradually take hold as economic momentum builds and labour market conditions stabilize further.

While uncertainty about Canada’s future trade relationship with the U.S. continues to add strain, it’s worth noting that as of September, 86% of Canadian exports to the U.S. still cross the border duty-free. Given these mixed but generally improving conditions, we remain cautiously optimistic about the Canadian economic outlook in the year ahead.

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The Q3 details

• Debt-servicing ratio edges lower but remains elevated: Canada’s debt-servicing ratio declined to 14.6% in Q3 2025, staying below the 15.1% peak reached in 2023 and slightly below 2019 (pre-pandemic) levels. The Q2 figure was revised upward from 14.4% to 14.7% but has been drifting broadly lower reflecting continued household income growth and lower interest rates. The mortgage debt service ratio remains elevated with a portion of mortgages (eg. 4- and 5-year fixed-rate mortgages) still renewing at higher interest rates than the emergency lows levels 4 and 5 years ago during the pandemic, but the non-mortgage household debt service ratio remains well-below pre-pandemic levels.

• Household debt continues modest expansion: Household credit market debt edged up 1% in Q3 to $3.2 trillion, with mortgage borrowing still expanding albeit at a slower pace amid the cooler housing market. This lifted the debt-to-disposable-income ratio to 176.7% from 176.3% in Q2, as debt growth continued to outpace income gains of 0.8%.

• Net worth supported by strong equity performance: Household net worth expanded 2.6% in Q3 to reach $18.4 trillion, supported by robust equity market gains. Financial asset values rose 4.8%, aligned with the S&P/TSX Composite’s 11.8% jump in Q3 following the prior quarter’s 7.8% gain.

• Real estate values continue to soften: Non-financial assets declined 0.3% as real estate values weakened further. The CREA’s MLS Home Price Index extended its downward trajectory with another 2% decline (not seasonally adjusted) following Q2’s 1% drop.

• Household savings rate remains stable: The household savings rate ticked slightly higher in Q3 to 4.7% from 4.6% previously, consistent with softer household consumption during the quarter.

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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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