Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, third quarter 2024
Released: 2025-01-30
Income inequality increased amid strong investment income gains for the highest-earning households in the third quarter of 2024. Easing borrowing costs and inflation moderated financial pressures for middle-income households and the least wealthy households.
Income gap widens, as investment gains for highest-income households outweigh wage gains for the lowest
Income inequality increased in the third quarter of 2024. The gap in the share of disposable income between households in the top 40% of the income distribution and the bottom 40% reached 46.9 percentage points, up from 46.3 percentage points in the same quarter one year earlier.
Despite interest rates declining recently, they remain elevated relative to the past two decades. While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. Lower income households are more likely to have a limited capacity to take advantage of these higher returns as they, on average, have fewer resources available for saving and investment.
In the third quarter, the lowest-income households (bottom 20% of the income distribution) experienced weaker growth in disposable income (+3.7%) relative to all households. Wage growth for the lowest-income households (+$115; +5.2%) was offset by an increase in interest paid on mortgages and consumer credit (+$122; +9.4%). Lower income households working in service sector jobs, such as retail trade and health, registered stronger wage gains than those working in the production of goods.
While the lowest-income households held their share of income constant in the third quarter, at 5.8%, those within the middle 60% of the income distribution decreased their share by 0.8 percentage points from one year earlier. In addition to middle-income households having relatively low growth in wages (+2.7% compared with +3.6% for all households), their investment gains were offset by higher interest paid on mortgages and consumer credit.
Chart 1
Change in average disposable income for lowest income quintile, including contribution of each income component, third quarter of 2024 relative to third quarter of 2023
In the third quarter, the highest-income households (top 20% of the income distribution) saw the largest increase in their share of disposable income (+0.9 percentage points) compared with other income groups. Average disposable income for the highest-income households (+6.8%) increased at a faster pace than the average for all households in the third quarter relative to one year earlier, as growth in investment income was far greater (15 times higher) than the increase in interest paid.
Chart 2
Change in average disposable income for highest income quintile, including contribution of each income component, third quarter of 2024 relative to third quarter of 2023
Net saving improves the most for middle-income households
Most households improved their average net saving in the third quarter of 2024 relative to one year earlier, as cost-of-living pressures generally eased. Households in the middle 20% of the income distribution had relatively low wage growth. However, they had the largest increase in net saving in the third quarter (+26.7%) relative to one year earlier as a result of limited spending on a range of items, such as food and beverages, clothing and footwear, and household equipment. In contrast, net saving for the bottom 20% of the income distribution (-2.6%) worsened in the third quarter relative to the same quarter one year earlier, as higher spending, especially for housing and utilities, continued to outpace income growth.
Chart 3
Average household net saving by income quintile
Households with a major-income earner younger than 35 years old had the smallest increase in net saving in the third quarter due to relatively low gains in wages (+1.3%) and investment (+1.7%). Middle-aged households (45 to 54 years) increased net saving (+21.6%) the most, as wage gains (+5.8%) outweighed spending increases (+3.7%). Households aged 65 years and older reduced net dissaving due to strong investment gains (+15.0%), which were derived from earnings on personal investments and pension plans.
Wealth gap stabilizes, as least wealthy benefit from real estate gains
Most wealth is held by relatively few households in Canada. The wealthiest households (top 20% of the wealth distribution) accounted for almost two-thirds (64.7%) of Canada's total net worth in the third quarter of 2024, averaging $3.3 million per household, while the least wealthy households (bottom 40% of the wealth distribution) accounted for 3.3%, averaging $83,189.
The gap in wealth between the top 20% of households and the bottom 40% reached 61.4 percentage points in the third quarter, unchanged from the same quarter one year earlier. The least wealthy households benefitted from a combination of gains in the average value of their financial assets (+9.3%) and real estate (+2.9%). In contrast, gains in net worth for the wealthiest households were derived only from financial assets (+11.7%), while the average value of their real estate (-4.1%) declined. Highest wealth households held on to their real estate, which slightly declined in value year over year. Least wealthy households purchased or refinanced real estate under more favourable terms during this period, including factors such as lower home prices and mortgage rates.
Least wealthy increase net worth at the fastest pace via real estate investments
The least wealthy households (+7.9%) increased their net worth at the fastest pace of any household group in the third quarter of 2024 relative to one year earlier. Along with easing interest rates and home prices, wealth growth for the least wealthy households was mainly due to those buying a home in the third quarter, as the increase in mortgage debt to finance those assets (+$2,586) was less than the increase in the value of their real estate holdings (+$3,132).
This is in stark contrast to a few years ago, when rising interest rates and peak home prices made purchasing a home less affordable.
Chart 4
Change in average net worth for two lowest wealth quintiles, including contribution of each wealth component, third quarter of 2024 relative to third quarter of 2023
Youngest households decrease mortgage debt, while that of older households increases
The youngest households—those younger than 35 years—were the only age group to continually decrease their mortgage debt balances since the end of 2022, as rising interest rates and housing cost pressures made home ownership less affordable. Average mortgage debt for the youngest households continued its declining trend, albeit at a slower pace, as the year-over-year decrease for the third quarter of 2024 (-4.5%) was lower than that for the previous two quarters (-5.1% for the second quarter and -5.3% for the first quarter).
Households in the youngest age group may be reducing their mortgage balances for various reasons. Prospective homeowners may be turning away from the housing market due to affordability concerns, while existing homeowners who purchased a home when interest rates were much lower a few years ago may be paying off their existing mortgage debt balances or moving into more affordable accommodations. As well, the youngest households may be receiving financial support from family to help them cope with the cost of living and reduce their debt obligations.
Meanwhile, older households increased their average mortgage debt in the third quarter relative to one year earlier, including households aged 55 to 64 years (+6.5%) and those aged 65 years and older (+6.3%). Older age groups may be increasing their mortgage debt for various reasons, such as to buy an investment property, to assist younger relatives with the purchase of a home, or for a range of other reasons.
Chart 5
Change in average household mortgage debt by age group of major income earner
Younger age groups reduce debt-to-income ratios the most
The debt-to-income ratio declined or was stable for all age groups in the third quarter of 2024, as income gains, mainly due to wages and investment income, exceeded debt increases. Households with a major income earner aged 35 to 44 years had the highest debt-to-income ratio of any age group, at 237.8% in the third quarter, down from 248.0% one year earlier. Meanwhile, households with a major income earner younger than 35 years old decreased their ratio from 170.4% to 162.6%. Households aged 65 years and older had a relatively constant ratio, as they benefitted from higher investment earnings, which compensated for higher indebtedness in the third quarter.
Chart 6
Debt-to-income ratio by age group of major income earner, third quarters of 2020 to 2024
Households across age groups have stable debt service ratios for first time in three years
An alternative indicator of household financial risk is the interest-only debt service ratio (DSR), which is based on the value of total interest payments on credit market debt as a share of disposable income. In the third quarter of 2024, the interest-only DSR stabilized for the first time in three years for households in all age groups, including younger households, which tend to be more indebted. For example, the interest-only DSRs of households aged 35 to 44 years (11.4%) and of those aged younger than 35 years (9.8%) were unchanged in the third quarter relative to one year earlier.
Along with recently easing affordability pressures, these data indicate that, on average, middle-income and lower wealth households are finding ways to improve their net saving, net worth and debt-to-income ratio. The latest figures from the Monthly Credit Aggregates program indicate that, along with declining lending rates, households are building their wealth through continuing investments in home ownership, as mortgage debt accelerated through the first two months of the fourth quarter.
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Sustainable Development Goals
On January 1, 2016, the world officially began implementation of the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the next 15 years. The plan is based on 17 specific sustainable development goals.
The distributions of household economic accounts for income, consumption, saving and wealth of Canadian households are an example of how Statistics Canada supports the reporting on the Global Goals for Sustainable Development. This release will be used in helping to measure the following goal:
Note to readers
Statistics Canada regularly publishes macroeconomic indicators on household disposable income, final consumption expenditure, saving and wealth as part of the Canadian System of Macroeconomic Accounts (CSMA). These accounts are aligned with the most recent international standards and are compiled for all sectors of the economy, including households, non-profit institutions, governments and corporations, along with Canada's financial position vis-à-vis the rest of the world. While the CSMA provide high quality information on the overall position of households relative to other economic sectors, the Distributions of Household Economic Accounts (DHEA) provide additional granularity to address questions such as vulnerabilities of specific groups and the resulting implications for economic well-being and financial stability. These estimates are an important complement to standard quarterly outputs related to the economy.
The DHEA estimates released today provide estimates of income, consumption, saving and wealth, including their sub-components by various household distributions up to the third quarter of 2024. Estimates have also been revised for prior periods to incorporate the latest CSMA benchmarks and various other inputs, including revisions back to 2016 for the income, consumption and saving series, and back to 2010 for the wealth series, notably to incorporate the latest household distributional information from the 2023 Survey of Financial Security.
The term "income gap," referred to in this text, is defined as the gap in the share of disposable income between households in the top 40% and bottom 40% of the income distribution. The "wealth gap" is defined as the gap in the share of net worth between households in the top 20% and bottom 40% of the wealth distribution. Estimates for net worth distributed by wealth quintile are combined for households in the two lowest quintiles for ease of illustration, since the average household in the lowest wealth quintile owed more in liabilities than it owned in assets, such as self-employed workers with negative net business equity and recent graduates with student loan balances.
As with all data, the DHEA estimates are not without their limitations. While some distributions are estimated using timely microdata or micromodels, such as wages and salaries and household debt, other distributions, including those for household final consumption expenditures, social transfers in kind and assets, rely on assumptions or use data from prior reference periods. Users should keep these limitations in mind when analyzing the estimates included in this release.
All values are expressed in unadjusted nominal rates. As a result, the estimates presented in this release are not adjusted for variations over time that may occur due to seasonal patterns and/or price inflation. Since the quarterly series are not seasonally adjusted, comparisons should only be made using estimates for the same quarter of each year.
Next release
Data on the DHEA for the fourth quarter of 2024 will be released on April 14, 2025, and will also include updated documentation on the sources and methods applied in today's release.
Products
The data visualization product "Distributions of Household Economic Accounts, Wealth: Interactive tool," which is part of Statistics Canada – Data Visualization Products (71-607-X), is now available.
The article "Distributions of Household Economic Accounts, estimates of asset, liability and net worth distributions, 2010 to 2023, technical methodology and quality report," which is part of the Income and Expenditure Accounts Technical Series (13-604-M), is also available.
Details on the sources and methods behind these estimates can be found in Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X). See section "Distributions of Household Economic Accounts" under Satellite Accounts and Special Studies.
The Economic accounts statistics portal, accessible from the Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
Contact information
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