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The Bottom Line:
Canadian household balance sheets remained resilient in Q4, with household net worth continuing to grow supported by further gains in financial asset values, albeit at a more moderate pace than in Q3. The debt-servicing ratio ticked lower in the quarter, driven by a lower mortgage debt service ratio, while the non-mortgage component remained little changed.
Housing continued to weigh on wealth in Q4 as property values declined again. The CREA MLS Home Price Index extended its downward trend through the quarter, offsetting part of the gains from stronger financial markets. At the same time, broader economic conditions remained relatively stable, with income growth continuing and borrowing activity moderating.
While uncertainties surrounding Canada’s trade relationship with the United States and broader global geopolitical developments continue to cloud the outlook, recent trends including resilient household balance sheets and steady per-person income growth provide an important buffer. We continue to expect per-capita growth backdrop in Canada to improve throughout 2026.
The details:
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Canada’s debt-servicing ratio declined to 14.57% in Q4 2025 from 14.61% previously. The decline reflected continued growth in personal disposable income alongside interest rate relief from prior rate cuts. Mortgage debt-servicing pressures remained elevated with a portion of mortgages, particularly 4- and 5-year fixed-rate loans originated during the pandemic, still renewing at interest rates above the emergency-low levels seen in 2020 and 2021, but the non-mortgage household debt service ratio remained well below pre-pandemic levels.
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Household credit market debt rose to $3.2 trillion in Q4, continuing to expand at a moderate pace. Mortgage borrowing remained the primary contributor to debt growth, although housing market softness continued to restrain the pace of new borrowing. This lifted the debt-to-disposable-income ratio to 177.2% from 176.3% in Q3.
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Household net worth expanded 1.3% to $18.6 trillion in Q4. Financial asset values continued to rise, supported by equity market gains. The S&P/TSX Composite Index increased 5.6% during the quarter, following the prior quarter’s 11.8% surge, and continued to outpace the S&P 500 index.
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Non-financial assets declined 0.3% as real estate values weakened further. The CREA MLS Home Price Index fell 2.2% during the quarter, extending the downward trend seen in earlier periods.
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The household savings rate fell to 4.4% in Q4 from 5.2% in the previous quarter, as growth in disposable income (+0.6%) lagged that in spending (+1.2% in nominal terms).
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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