Canadian Household Balance Sheet (2025 Q4)

Household wealth continues to climb as financial assets rise, and real estate values soften

• Canadian household net worth (assets minus liabilities) rose by $230.2 billion, or 1.3% quarter-on-quarter (q/q), to $18.6 trillion in Q4 2025, marking the ninth consecutive quarterly gain. For 2025 as a whole, household wealth increased by more than $1 trillion.
• Financial assets rose 2.5% q/q, driven by strong equity market performance in Canada and more modest gains in the United States.
• Residential real estate values declined by 0.4% q/q, reflecting a pullback in home prices.
• Household financial liabilities increased by 1.0% q/q, a slower pace than in Q3 as borrowing eased, with the pace of non-mortgage debt moderating in Q4.
• The household debt-to-income ratio rose to 177.2%, marking a fifth consecutive quarterly increase, as debt growth continued to outpace income.
• The debt-service ratio (total household debt payments as a share of disposable income) was effectively unchanged at 14.6%.

Key Implications

• Canadian household wealth has now increased for nine consecutive quarters, with financial assets once again doing most of the heavy lifting. However, with equity markets turning more volatile amid geopolitical tensions in the Middle East, this streak could be tested in Q1. U.S. equity markets are currently below their levels at the start of the year, while Canadian equities are only around 2% higher. At the same time, the housing outlook remains soft, with recent data pointing to a cooling market.
• The debt-to-income ratio has deteriorated as credit growth continued, while the debt-service ratio held steady, suggesting that household balance sheets are gradually weakening at the margin. Even so, both measures remain below their peaks in Q3 2022, implying that consumer spending should continue to expand, though likely at a muted pace in Q1.Higher gasoline prices are just beginning to weigh on household budgets. However, the drag could become more pronounced if fuel prices remain elevated for an extended period.

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