Skip navigation
Navigation skipped

News Releases

The Canadian Debt Picture: Home and Auto Buying, Renovations and Education Top List of Household Debt Contributors

 - Smart purchases top sources of debt for Canadians, however discretionary spending remains a concern

 - Last month was the best June on record for home sales, while home renovations are outpacing overall consumer demand

 - Education expenses are outpacing general inflation

TORONTO, ONTARIO--(Marketwired - Aug. 12, 2015) - The vast majority (80 per cent) of Canadians are in debt - unchanged from last year - however smart purchases including home purchases, home renovations/repairs and education expenses top the list as the major contributors, according to a recent BMO report.

The report, conducted by Pollara, found that Canadians are carrying - on average - $93,000 in debt.

"Given the angst about high debt burdens, it's somewhat comforting to know that Canadians are generally accumulating good debt to finance investments in their homes and educations, as opposed to bad debt such as discretionary spending on vacations and entertainment," said Sal Guatieri, Senior Economist, BMO Capital Markets.

Cited as Significant Contributors to Debt by Region  
Source of Debt National   ATL   QC   ON   MB/SK   AB   BC  
Buying a house 49 % 41 % 55 % 46 % 45 % 55 % 51 %
Buying a car 46 % 52 % 47 % 49 % 43 % 37 % 42 %
Home Renovations/Repairs 33 % 32 % 35 % 37 % 23 % 21 % 31 %
Education Expenses 32 % 27 % 31 % 39 % 22 % 18 % 32 %
Vacation Spending 28 % 28 % 27 % 32 % 17 % 14 % 33 %
Health Care/Drug Costs 25 % 24 % 28 % 26 % 17 % 17 % 28 %
Entertainment 22 % 19 % 24 % 25 % 15 % 18 % 20 %
Home Electronics 20 % 18 % 24 % 25 % 12 % 11 % 13 %
Stocks and investments 15 % 10 % 16 % 20 % 8 % 9 % 13 %

A Closer Look at Canada's Major Debt Contributors

"While rates are at all-time lows, it's important that Canadians are aware of the risk associated with taking on additional debt, regardless of its purpose. Having a financial plan which includes careful budgeting and asset allocation can help avoid any risk and uncertainties," said Sameh Elrefaei, Head of Personal Lending, BMO Bank of Montreal.

Home Sales Across Canada Remain Resilient

About half (49 per cent) of Canadians cited buying a home as a significant contributor to their current debt, with 34 per cent saying it is the main factor. According to BMO Economics, home sales are up 6 per cent in the first half of 2015 from a year ago.

"Home sales remain resilient across most of the country, led by soaring transactions in Toronto and Vancouver. Of growing concern, however, is that rapidly rising house prices in these two cities could encourage some households to take on larger mortgages than they can handle when interest rates rise," added Mr. Guatieri.

Home Renovations Continue to Outpace Overall Consumer Demand

One third (33 per cent) of Canadians said a home renovation or repairs added to their debt, and one in ten said it was the major source this year.

"Home renovations and repairs are running at a near 3 per cent real rate, in part due to an aging population, as seniors tend to spend more of their income on fixing up their home than younger age groups," said Mr. Guatieri.

Auto Sales at Record Highs

Slightly less than half of Canadians (46 per cent) with current debt said the purchase of a car added to their debt levels, and about one-fifth (18 per cent) said this was the top contributor. BMO Economics revealed that auto sales are at record highs and continue to rise moderately, supported by inexpensive credit, extended loan terms and rising employment rates.

Education Expenses Continue to Outpace General Inflation

Expenses including tuition, textbooks and supplies have risen around 3 per cent, putting extra pressure on student debt. The report revealed that over one third (37 per cent) of Canadians under 35 hold debt from student loans, and about one third (32 per cent) of all Canadians surveyed said education expenses have contributed to their current debt levels.
Survey results are from interviews with an online sample of 1,001 Canadians conducted between June 19th and 22nd, 2015. The margin of error for a probability sample of this size is ± 3.1%, 19 times out of 20. Data has been weighted by region based on the most recent Census figures, so that it is representative of all adult Canadians.

To view the full results of the 2015 BMO Annual Debt Report, please click here.

About BMO Financial Group

Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of approximately $633 billion as of April 30, 2015, and more than 47,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.


For further information: