That $12K roof repair? More Canadians are putting it on high-interest credit cards as household debt hits record highs

The numbers suggest that the usual ways of managing debt, such as refinancing, tapping home equity or simply borrowing less for a mortgage, aren't doing enough to offset growing balances elsewhere. Here's a closer look at what’s changed and what you may be able to do about it.

What the debt-to-income ratio measures

The debt-to-income ratio compares total household credit market debt — including mortgages, car loans, credit cards and lines of credit — with disposable income, or the money left after taxes. It doesn't mean the average household owes $1.80 in cash for every dollar they earn. Rather, it means total household debt across Canada is now roughly 1.8 times the total after-tax household income.

A closely related measure is the debt service ratio, which tracks how much income goes toward principal and interest payments. That figure rose to 14.75% in the first quarter, up from 14.68%. Put another way, nearly one out of every seven dollars Canadians earn is now going toward debt payments before paying for groceries, housing, utilities — or building savings.

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Why mortgage borrowing fell while total debt still rose

A slowdown in mortgage borrowing often signals consumers are becoming more cautious. But this quarter’s Statistics Canada data shows that while Canadians borrowed less for homes, they leaned more heavily on consumer credit.

That could mean a household that might once have used a low-interest home equity line of credit (HELOC) to pay for a $12,000 roof repair or renovation is instead carrying more of that expense on credit cards or unsecured lines of credit. It’s a much more expensive way to borrow, even if it's easier to access. This is simply an illustrative example, not a specific case from the data.

Are Canadians close to a breaking point?

Not necessarily, though it might feel like it for many. Household net worth actually rose 1.3% to $18.6 trillion, helped by stronger stock markets and higher real estate values. The debt-to-asset ratio, which is a measure of how much households owe relative to what they own, also improved slightly.

The more concerning trend is that Canadians are saving less while borrowing more. The household saving rate fell to 3.5%, its lowest level since early 2024, as spending continued to outpace income growth. It leaves households with a smaller financial cushion if interest rates rise, income falls or an unexpected expense pops up.