Households under 35 were the only age group to consistently lower their mortgage debt throughout 2024, according to new Statistics Canada data. Their average balances dropped 4.7% year-over-year in Q4, extending a trend that began in late 2022.
It may seem counterintuitive that younger households are reducing their mortgage debt, but StatCan says the reasons for this trend vary.
“Households in the youngest age group may be reducing their mortgage balances for various reasons,” the agency noted, such as “turning away from the housing market due to affordability concerns, while existing homeowners who purchased a home when interest rates were much lower from 2020 to 2022 may be paying off their existing mortgage debt balances or moving into more affordable accommodations.”
In some cases, younger Canadians are also getting help from family to manage the cost of living and reduce their debt.
In contrast, mortgage debt rose 7.7% among households aged 55–64 and 8.3% for those over 65. StatCan notes older homeowners may be borrowing for investment properties, helping younger relatives with down payments, or funding other financial goals.
Change in average household mortgage debt by age group
Lower rates shift the balance
The data show how Canada’s falling interest rate environment in 2024 reshaped household finances. The Bank of Canada cut its policy rate from a peak of 5.00% to 3.25% by December, helping to slow the growth in interest payments and ease debt servicing burdens.
Household interest payments rose by 9.0% in 2024—down sharply from 52.8% the year prior. For the first time in three years, the interest-only debt service ratio held steady across all age groups, including younger borrowers, who tend to be more indebted.
Debt-to-income ratios also improved. The under-35 cohort saw their ratio fall to 160.8%, down from 175.3%, while the 35–44 group still held the highest debt load relative to income at 238.2%.
Wealth gap stabilizes as lower-income households catch a break
Lower interest rates, rebounding home prices and slowing inflation helped some of Canada’s least wealthy households build net worth again.
Households in the bottom 40% of the wealth distribution increased their net worth by 8.8% in Q4 2024—faster than any other group—thanks to gains in both real estate values (+4.5%) and financial assets (+9.2%). In many cases, the value of real estate owned rose more than the increase in mortgage debt, reversing a trend seen during the peak of rate hikes in 2022–2023.
The wealthiest 20% of households, by comparison, saw no growth in real estate values and relied solely on financial markets for their 9.9% net-worth gain.
While the overall wealth gap remains wide, with the top 20% holding nearly 65% of net worth, it did not widen in 2024, a notable shift from prior years.
Income inequality continues to rise—but more slowly
StatCan also reported that Canada’s income gap widened for the fourth straight year, driven by strong investment gains for high earners. Disposable income rose 5.9% for the top 20%, compared to just 3.6% for the bottom 20%, who were the only group to see wage losses.
Still, the rate of inequality growth has slowed. The income gap rose just 0.5 percentage points in 2024, compared to two points in both 2022 and 2023.
Middle-income households fared best in many respects, with income gains of 5.4%—driven by strong wage growth. They also improved their savings position by spending far less than they earned.
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Last modified: April 14, 2025