EN 
The Bottom Line:
Canadian household balance sheets remain resilient in Q1 despite escalating global trade uncertainty and market volatility, with household net worth eking out a small gain. Although the debt servicing ratio is still elevated, it held steady, and net worth continues to hover near record highs even as its growth decelerates. However, Statistics Canada noted that wealth is concentrated in the top 20% of households by income – we have noted before that the uneven recovery of the Canadian economy means that only the top 40% of income earners have been able to save since the 2020 pandemic, while lower- and middle-income households face pressures from rising living costs.
Tariff uncertainties are also adding strain by threatening to push up import prices, softening real estate performance, and increasing equity market volatility. Meanwhile, business investment and hiring may be dampened by unresolved trade policy issues, which could further restrain personal income gains and net worth growth.
The Details:
-
Canada’s debt servicing ratio held steady at 14.4% in Q1 2025, remaining below the 15.1% peak in Q4 2023. Despite the stable ratio, debt payments are anticipated to rise over the year as 4- and 5-year fixed-rate mortgages, set during pandemic lows, continue to renew at elevated rates. These increases should remain manageable provided labor markets do not weaken substantially.
-
Total household liabilities edged up by 0.4% in Q1 to $3.1 trillion, with mortgage borrowing continuing to grow albeit at a slower pace amid a cooling housing market. This slowdown also contributed to the household debt-to-disposable income ratio creeping higher to 173.9% from 173.5% in Q4 2024, driven by household credit market debt growth of 1.1% outpacing income growth of 0.8%.
-
Household net worth nudged upward to $17.6 trillion in Q1, as modest rises in real estate values helped offset the impact of a slower-performing equity market—the S&P/TSX Composite’s growth slowed from 3% in Q4 2024 to 0.8% in Q1 2025—with inflows into non-money market funds moderating amid declining risk appetite.
-
Residential real estate asset values increased modestly by 0.6% in Q1, building on a 0.2% gain in the previous quarter; however, ongoing tariff uncertainties are expected to dampen buyer sentiment, while a softening housing market may undermine the value of households’ non-financial assets.
-
The household savings rate continued its downward trend, registering at 5.7% in Q1 following consecutive declines since Q3 of last year.
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.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. The reader is solely liable for any use of the information contained in this document and Royal Bank of Canada (“RBC”) nor any of its affiliates nor any of their respective directors, officers, employees or agents shall be held responsible for any direct or indirect damages arising from the use of this document by the reader. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
This document may contain forward-looking statements within the meaning of certain securities laws, which are subject to RBC’s caution regarding forward-looking statements. ESG (including climate) metrics, data and other information contained on this website are or may be based on assumptions, estimates and judgements. For cautionary statements relating to the information on this website, refer to the “Caution regarding forward-looking statements” and the “Important notice regarding this document” sections in our latest climate report or sustainability report, available at: https://www.rbc.com/community-social-impact/reporting-performance/index.html. Except as required by law, none of RBC nor any of its affiliates undertake to update any information in this document.