Canadian Debt Hits $3.29 Trillion As Distress Borrowing Surges

Households are on a borrowing spree, but mortgages are no longer the weapon of choice. Statistics Canada (StatCan) data shows household credit hit a new high in July. Mortgages continue to represent the lion’s share of debt, but growth is slowing to one of the weakest levels in a generation. Meanwhile, consumer debt continues to outpace mortgages, but for all the wrong reasons. 

Canadian household debt pushed 0.3% (+$10.0 billion) higher to $3.29 trillion in July, 4.2% (+$131.4 billion) higher than last year. As mentioned, most of it’s still mortgage debt. However, its share is shrinking after consumer credit suddenly made a comeback. 

Mortgage debt is cooling, but still growing. The outstanding balance climbed 0.4% (+$8.7 billion) to $2.45 trillion in July, 4.0% (+$93.7 billion) higher than last year. Nearly 4% growth would be considered healthy for a balance this large, but it’s an anomaly for Canada. Over the past 27 years, only 17 months have seen growth at this level or lower. All of those months were in 2023 and 2024, during the recent correction.
 

Consumer (non-mortgage) credit climbed 0.2% (+$1.3 billion) to $835.7 billion in July, up 4.7% (+$37.6 billion) since last year. The growth rate remains higher than mortgages, and this isn’t one of those good consumer growth surges. 

The recent consumer credit bump is due to consumption smoothing and/or distress borrowing, according to TransUnion. Smoothing occurs when households use debt to avoid cutting expenses when their incomes fail to keep up. The credit agency warns that households are tapping higher-interest revolving credit to absorb the higher cost of living. TransUnion also found that mortgages were rising under similar circumstances, as balances are climbing on existing accounts, not new borrowing.