Mortgages now make up 74.5% of all Canadian household debt. That's a record. It's never been this high, not even during the credit boom of the 1990s.

Statistics Canada data shows household credit climbed again in August, driven almost entirely by mortgage debt. Total household debt hit $3.13 trillion, up 4.45% from last year. Mortgage debt alone rose to $2.33 trillion, up 4.75% year over year.

The growth rate isn't alarming on its own. Borrowing is still historically slow. But the concentration is the problem. Nearly 8 in 10 dollars of household debt is now tied to real estate. That's a lot of eggs in one basket.

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This Isn't Normal

A decade ago, mortgages represented 67% of household debt. The 70% threshold was only crossed in March 2020. Now we're at 74.5%, and the trend keeps moving in the same direction.

This level of concentration is exactly what regulators have warned against. When households are overexposed to a single asset, especially one as interest-rate-sensitive as housing, the risks multiply.

Mortgages aren't like credit cards or personal loans. You can't just cut back on your mortgage payment when times get tough. It's a fixed obligation tied to an illiquid asset. And when that asset is also the primary driver of household wealth, you've created a feedback loop that amplifies both gains and losses.

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The Numbers Behind the Debt

Canadian household debt rose 0.48%, adding $14.98 billion, to reach $3.13 trillion in August. That's up $133.06 billion from last year. The 12-month growth rate peaked in June 2025, hitting the highest level since April 2023.

But the trend appears to be slowing now, even with cheaper credit and borrowing stimulus available. That tells you something about demand. People aren't rushing to take on more debt, even when it's easier to access.

Mortgage debt specifically climbed 0.50%, adding $11.49 billion, to $2.33 trillion in August. Year over year, that's up $105.60 billion or 4.75%. It's faster growth than last year, but still historically weak by Canadian standards.

Outside of the 2018 slowdown and the post-2020 rate shock, this kind of sluggish mortgage growth hasn't been typical since 2002. Canadians are being cautious. But even cautious borrowing is still heavily weighted toward mortgages.

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Why Concentration Matters

When 74.5% of your household debt is tied to housing, you're exposed in ways that go beyond your monthly payment. Your net worth is tied to housing. Your consumption patterns are tied to housing. If you feel wealthier because your home's value went up, you spend more. If home values drop, you pull back.

This creates a ripple effect across the economy. Housing doesn't just impact homeowners. It impacts consumer spending, business revenue, employment, and GDP growth. When housing drives both debt and wealth, a correction in the market doesn't stay contained. It spreads.

Monetary policy gets distorted too. When most household debt is mortgage debt, interest rate changes hit harder and faster in the housing market than anywhere else. That makes it harder for the Bank of Canada to manage inflation without causing collateral damage in real estate.

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The Bank of Canada Sees the Risk

The Bank of Canada recently acknowledged this problem. A Deputy Governor flagged that Canada's inflation readings are skewed because they include mortgage interest costs. That's unique among advanced economies, and it gives housing an outsized influence on monetary policy.

Adjusting for this could reduce how much real estate dictates policy decisions. That might improve long-term economic stability. But it also means this mountain of mortgage debt could face a harsher, less accommodating policy environment going forward.

If the Bank of Canada stops bending over backward to protect housing, mortgage holders will feel it. And with 74.5% of household debt concentrated in mortgages, that's a lot of people.

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What Happens When Housing Stumbles?

The vulnerability isn't theoretical. It's structural. When households can't cut back on mortgage payments and their wealth is tied to an illiquid asset, a downturn hits hard.

You can't sell your house quickly if you need cash. You can't reduce your mortgage payment if money gets tight. And if home values drop, you're stuck holding an asset that's worth less while your debt stays the same.

For the broader economy, that means consumer spending drops. People stop renovating, stop buying furniture, stop taking vacations. Businesses feel it. Employment slows. GDP growth stalls.

Housing corrections don't just hurt homeowners. They hurt everyone. And when 74.5% of household debt is tied to housing, the potential for that kind of shock is bigger than ever.

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Growth Is Slowing, But the Risk Isn't

The fact that mortgage growth is slowing down is actually encouraging in some ways. It means Canadians aren't piling on more debt at reckless rates. The 4.75% year-over-year growth is historically weak, and that's probably a good thing given how stretched households already are.

But slower growth doesn't reduce the concentration risk. The debt is still there. The exposure is still there. And as long as mortgages make up nearly 8 in 10 dollars of household debt, the vulnerability remains.

This isn't about whether Canadians can afford their mortgages right now. Most can. It's about what happens when conditions change. Interest rates, home values, employment, income. Any significant shift in those factors will hit harder because of how concentrated household debt has become.

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The Policy Dilemma

Policymakers are stuck. They want to cool housing and reduce household vulnerability, but they also don't want to tank the economy. When housing represents this much of household debt and wealth, any move to rein in the market risks triggering the exact kind of correction they're trying to avoid.

That's why the Bank of Canada's acknowledgment matters. If they're willing to adjust how they measure inflation and set policy, it signals a shift away from propping up housing at all costs. That's probably necessary for long-term stability.

But in the short term, it means mortgage holders are on their own. The safety net is getting smaller. And with 74.5% of household debt in mortgages, that's a lot of people flying without a net.

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The Bottom Line

Canadians have bet big on real estate. Mortgages now account for a record share of household debt, and that concentration creates risks that extend far beyond individual borrowers.

When housing drives both debt and wealth, a correction doesn't stay contained. It spreads through consumer spending, business revenue, and GDP growth. And with monetary policy potentially becoming less accommodative to housing, those risks are only growing.

The debt growth is slowing, which is good. But the concentration isn't. And until that changes, Canadian households remain dangerously exposed to a single, illiquid asset.