Canadian Household Debt-To-Income Ratio Near Record High

The effect on household finances following a hike in interest rates is a function of how quickly debt service charges increase. Analysis of debt composition by metropolitan area provides comparisons on how quickly various shares of household debt are impacted by a change in interest rates. Segmenting the DTI ratio by debt product provides the share of each product’s debt burden relative to income.

Vancouver households have a 177% mortgage debt-to-income ratio and a 31% HELOC debt-to-income ratio. Thus the debt-to-income ratio tied to real estate in Vancouver is approximately 208%, more than 3 times the ratio in Saint John. Toronto has the second highest DTI ratios for mortgages and HELOCs, at 145% and 25%, respectively. For all of Canada, the DTI ratio secured by real estate is approximately 133% (see chart 3).

It is interesting to note that the DTI ratio not secured by real estate is highest in Halifax at 47%, with DTI ratios of 20% for installment loans, 10% for credit cards, 9% for LOCs, and 8% for auto loans. At 30%, Victoria has the lowest DTI ratio not secured by real estate compared to the national average (39%).

Chart 3. Mortgages are the main contributor to the total debt burden

Sources: Equifax, Statistics Canada, Conference Board of Canada, CMHC calculations 

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