Sunday, August 24, 2025

Latest

CMHC Report: High Levels of Household Debt Could Lead to a Financial Crisis

The risks to Canada’s economy remain high as household debt levels continue to grow. In the latest analysis from the Canada Mortgage and Housing Corporation (CMHC), Deputy Chief Economist Aled ab Iorwerth warns that “household debt is a major risk to the Canadian economy.”

The report found that household debt levels in Canada have reached record highs, with the ratio of debt to disposable income now at 186%. This is well above the historical average of 150% and is the highest level of household debt in the G7.

“By contrast, household debt in the U.S. fell from 100% of GDP in 2008 to about 75% in 2021. While U.S. households reduced debt, Canadians increased theirs and this will likely continue to increase unless we address affordability in the housing market.” ab Iorwerth wrote.

Via CMHC

The report found that the growth in household debt is being driven by rising housing prices and interest rates — 75% of household debt comes from mortgages.

“Over the last year, interest rates have increased as the Bank of Canada battles inflation,” ab Iorwerth continued. “Over time, these higher interest rates translate into higher mortgage payments for households when those on fixed 5-year terms renew at higher rates.” 

The economist warns that high levels of household debt are a major risk to the Canadian economy because they make households more vulnerable to shocks. If interest rates were to rise or if there were a decline in housing prices, many households would find it difficult to make their debt payments. This could lead to a wave of defaults, which could in turn lead to a recession.


Information for this story was found via CMHC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

G Mining Q2 Earnings: Costing Gone Wild

Aya Gold Q2 Earnings: Production Slips Amid Ramp Up

i-80 Gold Q2 Earnings: Better, But Not Great

Recommended

Emerita Resources Expands El Cura Drill Program By 10,000 Metres As Deposit Remains Open For Expansion

ESGold Signs MOU For Tailings Project In Colombia With Grades Up To 42 g/t Gold, 280 g/t Silver

Related News

Foreign Investors Purchased a Record Amount of Canadian Debt in April

It appears that despite the negative economic consequences resulting from the pandemic crisis, Canada’s debt...

Wednesday, June 17, 2020, 07:09:00 PM

Canada’s Unemployment Rate Rises to 6.6% in August Amid Mixed Job Market

Canada’s unemployment rate climbed to 6.6% in August, marking the highest level since May 2017...

Friday, September 6, 2024, 11:00:59 AM

Long-End of Canadian Yield Curve Sent Soaring on Plan to Issue Record Debt

Canada’s federal government plans to issue a a record level of long-term debt in 2021,...

Tuesday, April 20, 2021, 02:34:00 PM

American Consumers Descend Further into Debt

Consumers across America embarked on unprecedented shopping sprees last year, causing total household debt to...

Thursday, February 10, 2022, 10:10:00 AM

Canada Halts Funding for Research Connected to Chinese Military and State Security Institutions

Just a few days after Prime Minister Justin Trudeau authorized the United States to shoot...

Wednesday, February 15, 2023, 02:18:00 PM