Savings fell to 5% as household debt edged higher
Canada’s household net worth reached $17.9 trillion in the second quarter of 2025, though nearly 70% of financial assets remain concentrated among the top 20% of wealth holders, according to Statistics Canada.
The agency’s national balance sheet showed net worth increased 1.5% from the prior quarter, extending a streak of quarterly gains to seven. Financial assets accounted for most of the increase, rising 2.7% to a record $11.2 trillion. Statistics Canada said the distribution of those assets remains uneven, leaving wealthier households “best positioned to benefit from investment income and valuation gains when markets perform well.”
Market performance supported the increase. The S&P 500 Index gained 10.6% during the quarter after a first-quarter decline, while the S&P/TSX Composite Index rose 7.8% following muted growth earlier in the year.
“Canadian household balance sheets remain resilient in Q2 despite uncertainties around trade policies and a more volatile stock market, with household net worth eking out a small gain,” Royal Bank of Canada economist Abbey Xu said.
The rise in financial wealth came alongside pressure in other areas. Non-financial assets fell to $17.3 trillion after two quarters of growth, weighed down by residential real estate. Xu cited Canadian Real Estate Association data showing the MLS Home Price Index declined 1.2% in the second quarter, reversing gains from the prior period. Statistics Canada said residential real estate values have declined by a “relatively modest” 0.3% since the first quarter of 2024.
“We did see a slowdown in the housing market attributed to trade uncertainty, and we do have a pickup in activity recently,” Toronto Dominion Bank economist Maria Solovieva said.
Income and labor market data pointed to constraints for many households. The seasonally adjusted household savings rate fell to 5% as spending increased 1.2%, exceeding the 0.3% growth in disposable income. The unemployment rate was 6.9% in June, the end of the second quarter, and later rose to 7.1% in August, the highest level in nine years outside the COVID-19 period.
“We have headwinds from the disposable income and from labour markets overall. That’s why we still think that there will be a bit of a slowdown going forward,” Solovieva said. “But despite all of this, the balance sheet is still strong, so that’s a good sign.”
Debt indicators also edged higher. The household debt service ratio increased to 14.41% from 14.37%, remaining below the 2023 peak of 15.1%. The debt-to-disposable income ratio rose 1.1 percentage points to 174.9%, equivalent to $1.75 in credit market debt for every dollar of disposable income, compared with a record $1.86 in the fourth quarter of 2021. Mortgage interest payments increased 0.9% as loans taken out at lower rates renewed at higher ones.
“If the labour market weakens further, that will have a negative impact on wage growth,” Xu said. “If that doesn’t happen, then the risks should be manageable from a labour market perspective.”
Later data point to the same divide. Bloomberg reported that household net worth rose at a faster pace in the third quarter, driven by a record dollar increase in financial assets, with Statistics Canada again noting that wealthier Canadians were most likely to capture those gains.
