Stats Canada’s Q2 2025 report revealed the latest insights into how households fared in the year’s second quarter. The report highlights that net worth, the value of all assets minus all liabilities, increased by $257.7 billion, marking the seventh consecutive quarterly rise. 

Household net worth is not evenly distributed across all wealth quintiles. The gap in wealth between the wealthiest (top 20%) and the least wealthy (bottom 40%) reached 61.4% in Q1 2025 and is up 0.2% from a year earlier. The top 20% wealthiest hold almost 70% of financial assets as of Q2. 

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Key Takeaways

• Household net worth increased by 1.5% in Q2 2025.
• Canadian households own approximately $4.86 in real estate for every dollar of disposable income.
• The wealth gap between the wealthiest and the least wealthy increased to 61.4% in Q1 2025.

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The Power of Home Equity Highlighted

Household wealth in Canada continued to lean heavily on the housing market in the second quarter, with home equity serving as one of the strongest contributors to net worth. Residential real estate values were nearly unchanged from Q1. Owner’s equity as a percentage of real estate dropped to 73.7% in Q2 2025 from 75% in Q2 2024 as the value of outstanding mortgages grew despite softening values. 

The value of household real estate as a proportion of disposable income is one indicator of housing affordability in Canada. In Q2, this fell to 486.41%, down from 520.85% in Q2 2024. A high ratio relative to disposable income indicates that real estate accounts for a large part of household wealth in Canada and is a key asset for long-term financial security. For every dollar in after-tax income, a household owns approximately $4.86 in real estate. 

However, this can also indicate that home prices continue to rise faster than income levels, making homeownership less attainable for the least wealthy. At the same time, Canadians who already own property continue to see housing as a stabilizing force in their balance sheets, with equity growth helping to counterbalance rising debt obligations. This widening gap highlights the dual nature of real estate in Canada: it acts as both a primary driver of wealth for existing owners and a growing barrier for those trying to enter the market.

Housing Supply a Continuous Problem

There remains an imbalance between demand and supply, which puts pressure on housing prices, making it increasingly more difficult for individuals and families to enter the housing market and afford a home. The housing supply shortage has significant implications for first-time homebuyers (FTHB) and lower-income households. 

Concerns have been raised about the future housing supply and its potential impact on affordability. The value of residential real estate may continue to rise despite higher interest rates. Canada’s mortgage rates are straining homebuyers’ borrowing capacity, and the mortgage stress test adds to the challenges buyers face. These same concerns are driving many Canadians to enter the housing market now to avoid even higher borrowing costs and home prices in the future as our housing supply dwindles.

Mortgages Squeeze Household Budgets

Mortgage costs have increased in Canada, putting financial pressure on household budgets. At the end of Q2, the household debt service ratio, which measures payments on credit market debt as a proportion of household disposable income, increased for the first time in 6 quarters, reaching 14.41%. 

Mortgage interest payments rose 0.9% while principal payments were relatively unchanged, likely a reflection of upward pressure on interest costs from mortgage renewals. Household financial liabilities, which consist primarily of mortgage and non-mortgage debt, increased 1.5% in Q2 to reach $46.7 billion.

Homebuyers must carefully assess their financial situation and consider the impact of higher interest rates on mortgage affordability. Homeowners need to clearly understand their financial situation and develop a budget that allows them to meet their future mortgage obligations while maintaining overall financial well-being. 

Seeking professional advice and exploring different mortgage options can help mitigate the impact of rising mortgage costs on homebuyers. A knowledgeable mortgage expert can help prospective borrowers understand affordability and help them shop for the lowest rate available. 

Although shopping for a low rate may be a priority for most homebuyers, it’s equally valuable to shop for the right mortgage. 

What’s the right mortgage? The right mortgage is a borrowing solution that satisfies your current needs and mitigates future risks. Mortgage experts possess industry knowledge to highlight the features and benefits that may be most valuable for your financial situation.  

For example:

• If you choose a mortgage solely based on its low rate without considering the impact of excessive penalties on certain low-rate mortgages, you could be left with a hefty penalty if you or your family need to relocate for work. By honestly discussing your situation with a mortgage expert, you could avoid considering solutions without flexible options, such as portability or lower discharge penalty calculations.

Frequently Asked Questions

Final Thoughts

The latest StatCan data highlights how housing continues to shape the financial health of Canadians. Household net worth rose again in Q2, but the gain was driven more by financial assets than by real estate, which remained flat. Mortgage debt kept climbing, pushing homeowner equity down and raising the debt-to-income ratio. For many households, this means higher carrying costs and less breathing room in their budgets. 

Homeownership remains an essential path to long-term wealth, but affordability pressures are mounting as debt grows faster than income. In this environment, careful financial planning and comparing mortgage options are more important than ever.

Contact a nesto mortgage expert today to find the best mortgage rate and strategy to manage today’s challenges and build long-term stability.

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