Household Debt Eased in Q2 2026 — But Mortgage Interest Payments Rose the Most in Two Years

Mortgage borrowing hits its slowest pace since early 2024

Canadian households added $19.4 billion in new mortgage debt in the second quarter of 2026, according to Statistics Canada's national balance sheet and financial flow accounts, released September 11. That is the slowest pace of mortgage borrowing since the first quarter of 2024, and it marks a second straight quarterly slowdown.

Total household borrowing — mortgages plus consumer credit and other loans — fell to $29.4 billion in the quarter, down $5.0 billion from the first quarter. Non-mortgage borrowing, including consumer credit, slowed to $10.0 billion.

The slowdown came despite a 7.2% quarterly increase in the value of home resales, seasonally adjusted. Even with that pickup, StatCan noted it was the weakest second quarter for resale activity since 2021 — a sign that fewer transactions are happening, not that each one is suddenly larger.

Two measures of household debt burden improved at the same time

Household credit market debt as a share of disposable income fell from 178.6% to 176.4% in the second quarter — the largest quarterly drop since the third quarter of 2024. In plain terms, households held about $1.76 in credit market debt for every dollar of disposable income, down from $1.79.

The household debt-service ratio, which measures required principal and interest payments as a share of disposable income, eased to 14.52% from 14.68%. StatCan attributed the improvement to income growing 2.1% in the quarter, more than double the 1.0% growth in total debt payments.

Canadian Mortgage Trends, reporting on the release, quoted BMO senior economist Shelly Kaushik crediting past cuts to borrowing costs and continued income growth for keeping the debt-service ratio better than expected. She also flagged that the measure would likely face upside pressure over the coming year as more mortgages reach their scheduled renewal.

What did not ease: the interest bill on mortgages already in force

Set against the improving averages, one line in the release moved the other way. Mortgage interest payments rose 1.6% in the second quarter — the largest quarterly increase in two years, StatCan reported. That was the main driver behind total interest payments rising 1.4% and overall debt payments rising 1.0%.

This is the renewal effect showing up in the national accounts. A household whose mortgage was arranged, or last renewed, when borrowing costs were lower is now resetting against today's terms — and that reset adds to the interest bill even while the broader debt-service ratio, averaged across everyone, is easing.

The value of household residential real estate edged up 0.4% to $8,523.3 billion in the quarter but remained 0.3% lower than a year earlier, and residential mortgage debt continued to represent almost three-quarters of total household liabilities.

What it means if your own renewal is coming up

A national average is built from millions of files at every stage of their term. Yours is at one specific point, with one specific balance, on one specific structure — and that is what actually determines what your renewal costs, not the direction the country's debt-to-income ratio moved last quarter.

• Staying with your current lender at renewal is a straight renewal — it does not re-run the mortgage stress test.
• Switching lenders is treated as a new application, and does require requalifying at current terms.
• The gap between those two paths is exactly where the interest-payment increase in this data is landing hardest — on borrowers who assume a renewal is automatic and don't look at the number until the letter arrives.

Our own mortgage renewal guide walks through that distinction in more depth, and the payment calculator lets you model what a renewal actually does to your monthly number before you sign anything.

What to watch next

StatCan noted the Bank of Canada left its policy stance unchanged at both scheduled decisions inside the second quarter, citing persistent macroeconomic uncertainty. The next scheduled announcement lands October 28, and it is the one figure in this whole release that borrowers with a near-term renewal should actually track, since it feeds directly into variable and short-term pricing.

The share of income households set aside as savings also improved to 3.7% in the quarter, with disposable income outpacing spending — consistent with the picture of households paying down debt a little faster than they're taking it on, even as existing mortgage holders absorb higher interest costs along the way.