Aug 29, 2026
Canadian consumer debt reached a record $2.64 trillion in the second quarter of 2026, up $116.7 billion — or 4.6% — from a year earlier, according to a recent TransUnion report. While record debt is often associated with households falling behind on paying their bills, this time the fastest-growing segment of money owed belongs to consumers with the highest credit scores — and bigger paycheques.
Super prime borrowers, who are the top-rated credit tier, increased their total balances by 6.5% year-over-year to $1.74 trillion, outpacing the 5.9% growth seen among subprime borrowers. In short, Canada's most creditworthy consumers are expanding their borrowing faster than those typically identified as financially vulnerable.
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Here’s what households across all risk tiers should consider.
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Who is driving Canada's debt growth?
Debt growth was uneven across credit tiers. Prime plus balances — borrowers with interest rates that are based on the prime rate plus added basis points — rose by 1.2%, while prime balances remained flat; at the same time, super prime and subprime borrowers — borrowers with the lowest loan interest rates — drove the largest growth in new debt balances.
Part of the issue is that credit limits for these super- and subprime borrowers grew in step with total balances — an indication that lenders expanded available credit lines rather than consumers maxing out existing limits.
Non-mortgage debt reflects a similar pattern.
The average Canadian carrying non-mortgage debt now owes $28,118 — a 7.6% year-over-year increase. The major causes for debt accumulation growth were auto loans (up 7.9%), lines of credit (up 7.4%), personal loans (up 7.1%) and credit cards (up 5.1%).
The market segment that drove the growth of non-mortgage debt was concentrated primarily among prime plus and super prime consumers (growing at roughly 5%), while subprime debt balances edged down by 0.2%.
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High-credit borrowing vs. household stress
While the TransUnion report does not use the term, the pattern mirrors what market analysts call "doomspending" — a new term for spending frivolously with no concern for future financial consequences. Doomspending often occurs when a person (or household) wants to maintain lifestyle spending and, as a result, takes on debt during uncertain economic conditions rather than tightening budgets.
Matt Fabian, senior director of financial services research and consulting at TransUnion Canada, described the shift as "a widening divide across risk tiers," with super prime, prime plus and prime consumers continuing to add non-mortgage debt while subprime consumers grew more cautious.
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For higher-income households, increased borrowing may represent planned investments, such as home renovations or vehicle purchases made possible by available credit capacity. The danger is that carrying higher debt loads can increase the household’s vulnerability if economic conditions shift.
Quiet pressure on mortgage holders
New mortgage originations grew by 7.8% year over year — slower than the double-digit growth seen in prior quarters — as affordability constraints kept prospective buyers on the sidelines.
Nevertheless, existing homeowners are carrying larger balances: The average outstanding mortgage balance rose 4.2% to $293,270, even as total active mortgage accounts dipped slightly. Newer buyers took on smaller loans on average, with initial mortgage balances dropping 2.4% to $354,683, reflecting larger down payments on property purchased or the decision to purchase lower-priced homes.
Where financial vulnerability is concentrated
One other area of concern highlighted by the TransUnion report is that mortgage delinquencies of 60 days or more rose modestly at the national level, concentrated primarily in Ontario and British Columbia, where average mortgage balances are highest.
Overall, however, early-stage mortgage loan delinquency did show improvement, with the proportion of Canadians 30-plus days behind on payments falling to 4.27%, marking a two-year low. The real pinch point can be seen in the later-stage delinquencies (60-plus and 90-plus days past due), which are trending upward.
Another area that the TransUnion report highlighted as a cause for concern was insolvency rates. For consumers, insolvency rates rose to 1.10%, up from 0.94% two years ago, driven mainly by non-homeowners. Alberta, Saskatchewan and Ontario accounted for the majority of severe delinquency increases. Most insolvencies were filed as consumer proposals — structured repayment agreements — rather than bankruptcies, indicating that distressed borrowers are seeking formal restructuring to manage their debt loads.
Practical steps for managing personal debt
Regardless of your current credit rating, virtually every Canadian household can insulate themselves from the negative consequences of debt through a few simple steps.
- Evaluate debt against income, not credit scores: A strong credit score reflects payment history, not available room in a monthly budget.
- Distinguish planned debt from cash-flow gaps: Differentiate between intentional financing for capital assets and borrowing used to cover recurring operational shortfalls.
- Prepare for mortgage renewals: Homeowners with mortgages renewing over the next 12 to 24 months should model potential rate adjustments early to adjust household budgets accordingly.
- Address debt stress early: If non-mortgage debt payments become difficult to manage, exploring credit counselling or formal restructuring early preserves more financial options than waiting until payments are missed.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
