The distribution of mortgage debt
in Canada

Warning View the most recent version.

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please "contact us" to request a format other than those available.

By Raj K. Chawla

Full article: HTML | PDF

From 1982 to 2008, household debt in current dollars increased more than eight-fold. Throughout that period, mortgages accounted for approximately two-thirds of household debt while consumer debt comprised the other third.

Rising real estate prices played a part in the increase in mortgage debt. In current dollars, average housing prices increased from $71,800 in 1982 to $303,500 in 2008. Over the same period, the average mortgage carried by households increased from $41,200 to $176,200.

Since it takes time to pay off a mortgage, mortgagees were much younger, on average, than mortgage-free homeowners. In 2008, more than 80% of households under age 45 became homeowners in the 10 preceding years.

In 2008, Canadians spent an average of 17% of their disposable income on mortgage payments—the 'mortgage-liability ratio.'

The mortgage-liability ratio varied across households. Nearly 4 in 10 mortgagees spent at least 20% of their disposable income on mortgage payments. Another 4 in 10 spent between 10% and 19%, while 2 in 10 had a mortgage-liability ratio of less than 10%.

The average mortgage-liability ratio also varied across regions, from a high of 20% of household income in British Columbia to a low of 14% in Atlantic Canada.

The proportion of mortgagees age 45 to 54 spending at least 20% of their disposable income on mortgage payments remained relatively stable over the 2000s at a level that was lower than in the late 1990s. The increase in recent years was mainly concentrated among mortgagees under 45 and from 55 to 64.

Households spending 20% or more of their disposable income on a mortgage had different spending patterns than those with a lower mortgage-liability ratio. In addition to having higher shelter costs, they spent more on food, clothing and transportation, and saved less than mortgage-free homeowners.