From mortgage payments to credit card bills, Canadians are carrying more personal debt than at any other time in the country’s history. According to data released in early 2025, the average household owes more than $1.84 for every dollar of disposable income — a sobering statistic that has sparked concerns from the Bank of Canada to local community centres.

While debt has long been a part of life in modern economies, the scale and structure of Canadian borrowing have changed. Low interest rates in the 2010s and early 2020s encouraged aggressive borrowing — especially in real estate — but the post-pandemic tightening cycle has left many households exposed. Rising inflation, housing costs, and stagnant wages are forcing more Canadians to lean on lines of credit and credit cards just to meet daily needs.

The Mortgage Trap

The real estate boom of the 2020s lured thousands of Canadians into record-breaking mortgages. Now, as fixed terms renew at higher rates, many families are seeing monthly payments rise by hundreds — or even thousands — of dollars. In Ontario and British Columbia, where housing costs are highest, variable-rate mortgage holders are among the most vulnerable.

The Bank of Canada’s policy rate, hovering around 5%, has pushed prime lending rates to their highest levels since 2001. Homeowners with home equity lines of credit (HELOCs) — often used for renovations or to consolidate debt — are now seeing monthly interest payments double or triple.

Credit Card Crunch and Consumer Lending

Beyond housing, Canadians are turning to unsecured credit at alarming rates. Credit card balances hit an all-time high in Q1 2025, and delinquency rates are creeping upward. Younger Canadians — particularly those aged 25 to 34 — are disproportionately affected, often juggling student loans, rising rent, and underemployment.

Payday lenders and high-interest installment loan services continue to proliferate, especially in lower-income urban areas. The federal government’s promised crackdown on “predatory lending” has yet to materialize in any meaningful legislative form.

Key Challenges Facing Borrowers

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Hope on the Horizon?

Despite the gloomy numbers, there are signs of adaptation and resilience. Non-profit credit counselling agencies have seen a 38% uptick in consultations this year, while major banks are offering more flexible repayment plans. Some provinces — like Alberta and Quebec — are piloting debt literacy modules in public high schools, hoping to build smarter habits from an earlier age.

The Way Forward

Experts agree: Canada needs a coordinated national strategy to address household debt. That means combining regulation with education, support services with systemic reform. While economic headwinds may persist, the tools to build financial resilience — both personal and collective — are available.

For now, the key lies in awareness. Canadians must confront their relationship with credit, resist the culture of overextension, and seek out the many resources that already exist. Financial health, like physical health, is not instant — it’s built through consistent effort, planning, and support.