The Bank of Canada's Own Research Says Recent Buyers Are Running a Deficit
New Bank of Canada staff research finds the average household budget quietly flipped negative during the 2022-24 inflation shock — and it's homeowners, not renters, carrying the shortfall.
The short version
- A new Bank of Canada staff note finds average household spending outpaced income during the 2022-24 inflation shock, and the gap hasn't fully closed even as inflation has eased.
- By 2025, homeowners were running an average annual shortfall of $1,817, while renters were close to break-even at just $90 — the opposite of what you might expect.
- Households under 35 ran the largest shortfall of any age group, at $4,249 a year, while the bottom three income groups were all in negative territory.
- The author's own explanation: recent buyers are carrying mortgages that are large relative to income, so a household that looks fine on paper can still be spending more than it earns every year.
What the research actually found
A staff analytical note published by the Bank of Canada this month put a number on something a lot of households have felt without being able to prove: since the 2022-24 inflation shock, spending has been growing faster than income for a meaningful share of the country — and the average is hiding who, specifically.
Between 2020 and 2025, the average Canadian household spent about $6,500 more per year than it did before the pandemic, while disposable income rose by about $7,400 over the same span — a modest $900 annual surplus overall, according to the Bank of Canada's own published note by senior researcher Yaz Terajima. Terajima's central point is that slower price growth today doesn't undo the higher prices households have already had to absorb since the pandemic began — the ground lost during the inflation shock stays lost even once inflation itself has cooled.
That aggregate $900 surplus is an average, and averages hide the households on either side of it. Terajima's note breaks the same data down by income, age and housing status for 2025, and the pattern that shows up is not the one most coverage of renewal stress has been describing.
Homeowners, not renters, are carrying the shortfall
In 2025, homeowners ran an average annual shortfall of $1,817 — about 2% of income — while renters were essentially break-even, at a $90 average shortfall. That's a genuinely counterintuitive result: homeowners are generally the wealthier group on paper, with an asset renters don't have. The research doesn't fully explain the reversal, but it points at the most obvious mechanical cause — nearly half of homeowners are mortgage-free, typically the older ones, while a household that bought at the top of the market five or six years ago is carrying a much larger mortgage relative to its income than that average suggests.
The age breakdown tells a similar story. Households under 35 ran the largest shortfall of any group, at $4,249 a year — the only age group in outright negative territory. The narrowest surplus of any older group belonged to the 55-to-64 bracket, at just $169 a year, essentially flat. By income, the bottom three quintiles were all running deficits — from $4,236 in the lowest quintile to $6,805 in the second — while only the top two income groups showed a genuine surplus, with the wealthiest fifth averaging $14,006 ahead.
Why this matters specifically at renewal
A household with little or no annual surplus has correspondingly little room to absorb a higher payment without cutting something else. That's the practical link between this research and the renewal wave that's been working through the system since 2025: a homeowner whose budget already has a $1,800 hole in it is starting from a worse position than the same household five years ago, before a single higher payment shows up.
This is also why the Bank of Canada's own Financial Stability Report has separately flagged the equity side of the same problem — some owners facing falling home values may have too little equity to refinance at all, on top of a payment that's higher than before. The two findings point at the same underlying households from different angles: thinner cash flow, and in some cases thinner equity, arriving at the same renewal.
What to check before your renewal, not after it
None of this means a specific renewal will be unaffordable — it means the margin for error is thinner for some households than the headline numbers suggest, which makes it worth checking the actual numbers rather than assuming.
- Run your actual renewal payment at current pricing, not the payment you signed for originally — the gap is often larger than expected once you see it in writing.
- If you bought in the last five to six years, ask specifically about your loan-to-value position, since that's the factor tied to whether refinancing or switching lenders stays fully available to you.
- If your household budget is already tight, a longer amortization at renewal is a legitimate way to lower the payment — worth understanding the trade-off before you assume you have to accept whichever number a renewal notice quotes.
Nearly thirty years in Canadian financial services, based in Waterloo Region and working across Ontario. Most people are handed a product — you deserve a plan.
General information only, based on the Bank of Canada's own published research and public reporting on it. Individual household finances vary, and nothing here is financial advice specific to your situation. Illustrative only, subject to full qualification, lender approval and final terms.
Sources: Bank of Canada — staff analytical note on household spending and income since 2020, by Yaz Terajima, September 2026 · Better Dwelling — Most Canadian Households Now Run A Deficit To Meet Inflation: BoC, September 2026