Mortgage borrowing rose while values fell
Mortgage balances kept growing in late 2025 even as home values declined, meaning leverage rose while housing wealth softened. The shift implies household borrowing expanded even without price appreciation, and financial markets — not housing — were the main source of net wealth growth in that period. (canadianmortgagetrends.com)
Canadian households carried more mortgage debt at the end of 2025 even as the value of their homes slipped. (statcan.gc.ca) Statistics Canada said household residential real estate fell 0.4% in the fourth quarter to C$8.45 trillion, leaving it 0.2% below the end of 2024. In the same quarter, total household liabilities rose C$33.0 billion, or 1.0%, and the ratio of household credit market debt to disposable income climbed to 177.2% from 176.3%. (statcan.gc.ca) A separate Statistics Canada release said average mortgage debt kept rising across every age group in 2025. Households led by someone aged 55 to 64 posted the fastest year-over-year increase at 6.0%, while the youngest households recorded the slowest at 3.7%. (statcan.gc.ca) The balance-sheet shift left financial markets doing more of the work that housing had done in earlier years. Statistics Canada said household net worth still rose by C$230.2 billion in the fourth quarter to C$18.59 trillion, while financial assets increased 2.5% to C$11.95 trillion. (statcan.gc.ca) Equities drove much of that gain. The S&P/TSX Composite Index rose 5.6% in the fourth quarter and finished 2025 up 28.2% from a year earlier, while the ratio of financial assets to non-financial assets reached 120.7%, the highest level in more than two decades. (statcan.gc.ca) Borrowing costs were easing, but debt loads were still high. Statistics Canada said the household debt service ratio slipped to 14.57% in the fourth quarter from 14.61% in the third, and the Bank of Canada says households with high debt and low home equity are more vulnerable if income falls. (statcan.gc.ca) (bankofcanada.ca) The Bank of Canada’s policy rate stood at 2.25% at the end of 2025, down 1.0 percentage point from a year earlier. Statistics Canada said that lower-rate backdrop coincided with weaker wage growth in 2025 and uneven gains across income groups. (statcan.gc.ca) The wealth gains were not broadly shared. Statistics Canada said the top 20% of households held 65.7% of Canada’s total net worth at the end of 2025, averaging C$3.5 million per household, while the bottom 40% held 3.0% and averaged C$81,700. (statcan.gc.ca) By March 2026, Statistics Canada was describing the housing market as softer and household wealth as increasingly tied to financial assets. Late 2025 closed with Canadians owing more on mortgages, owning homes worth slightly less, and relying more on stocks and other financial holdings to lift net worth. (statcan.gc.ca)
