Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, second quarter 2025
Released: 2025-10-09
The income gap remained at a record high in the second quarter of 2025, unchanged from the previous year, amid a weakening economy that negatively affected household income and net saving across the income distribution. The wealth gap grew as strong financial market gains benefited the wealthiest, while a decline in real estate values weighed on the average wealth of younger age groups and the least wealthy.
Income gap remains at a record high amid pervasive impacts of weakening economy
The income gap—defined as the difference in the share of disposable income between households in the top 40% and the bottom 40% of the income distribution—remained at a record high of 48.4 percentage points in the second quarter of 2025, the same level recorded a year earlier.
Households' ability to maintain their economic well-being differs with changing macroeconomic conditions. In response to easing inflation, the Bank of Canada's policy rate reached 2.75% in the second quarter of 2025, down 2 percentage points from a year earlier. While declining interest rates can lead to easing borrowing costs, they can also lead to lower returns on interest-bearing investments such as savings and deposit accounts, with varying impacts for households across the income distribution.
Weak employment gains along with a downturn in economic activity contributed to a slower increase in disposable income for households in the second quarter. Data from the Labour Force Survey show that the employment rate—the proportion of the employed population aged 15 and older—has been on a downward trend since early 2023, with most employment gains derived from part-time work.
Disposable income grew by an average of 3.9% in the second quarter of 2025 relative to a year earlier, down from an annual increase of 5.9% in the second quarter of 2024. Wage earnings were notably weak in the second quarter of 2025 for workers in goods-producing sectors such as mining and oil and gas extraction, as well as manufacturing, and in services-producing sectors such as trade, and professional and personal services.
Disposable income for the lowest income households (bottom 20% of the income distribution) grew at a faster-than-average pace (+5.6%), due mainly to an increase in transfers from government—such as Employment Insurance, social assistance, and retirement benefits—rather than from employment income. Taxes paid declined since government support tends to be either tax exempt or taxed at a lower rate relative to employment income. The lowest income households reduced their net investment income, as a large decline in investment earnings (-21.2%), mostly from interest-bearing deposits, outweighed lower interest payments (-8.1%).
Chart 1
Change in average disposable income for lowest income quintile, including contribution of each income component, second quarter of 2025 relative to second quarter of 2024
Average disposable income for the highest income households (top 20% of the income distribution) increased at a below average pace in the second quarter of 2025 relative to a year earlier (+3.1%), due mainly to a relatively weak gain in average wages. Their net investment income increased at the fastest pace of any income group in the second quarter of 2025, due mainly to a large reduction in interest payments relative to a year earlier (-9.6%).
Chart 2
Change in average disposable income for highest income quintile, including contribution of each income component, second quarter of 2025 relative to second quarter of 2024
Net saving worsens across the income distribution for first time since peak inflation three years ago
Net saving worsened for households across the income distribution in the second quarter of 2025 relative to a year earlier, marking the first time this has occurred since 2022 when inflation reached a 40-year high. Although inflation eased in the second quarter of 2025, weak wage gains did not keep pace with household spending growth, especially for necessities such as housing, transport, and groceries. Net saving worsened the least for higher income households despite weak wage gains, as their net investment earnings benefited from interest rate reductions. Higher income households tend to hold balances on variable rate credit products such as lines of credit, rather than fixed rate products such as credit cards.
Chart 3
Average household net saving by income quintile
Wealth gap increases as wealthiest benefit most from financial market gains
The wealthiest households (top 20% of the wealth distribution) accounted for almost two-thirds (64.8%) of Canada's total net worth in the second quarter of 2025, averaging $3.4 million per household. Meanwhile, the least wealthy (bottom 40% of the wealth distribution) accounted for 3.3%, averaging $86,900. Overall household net worth increased in the second quarter of 2025 relative to a year earlier (+4.5%), derived from strong gains in financial assets (+9.1%), mainly from equity markets, while real estate values declined (-1.0%).
The gap in wealth between the top 20% and the bottom 40% reached 61.5 percentage points in the second quarter of 2025, up 0.2 percentage points from a year earlier. The least wealthy had a lower net worth gain relative to the wealthiest as the least wealthy were more engaged in the housing market during a period of weaker housing market conditions.
The least wealthy grew their net worth in the second quarter of 2025 relative to a year earlier (+4.7%), due solely to gains in the value of their financial assets (+8.3%). However, this gain was lower than for all households (+9.1%). Although the least wealthy were more active in the housing market in the second quarter of 2025, lower average housing values resulted in smaller gains in their real estate assets (+4.1%) relative to the associated increase in their mortgage costs (+7.7%).
In contrast, the wealthiest households increased their net worth at the fastest pace (+4.9%) in the second quarter, as they had the strongest growth in the value of their financial assets (+9.6%) combined with relatively limited growth in mortgage debt (+1.9%).
Chart 4
Change in average net worth for two lowest wealth quintiles, including contribution of each wealth component, second quarter of 2025 relative to second quarter of 2024
Youngest households increase wealth the least as they reduce real estate holdings
The youngest households—those under the age of 35 years—increased their wealth at the slowest pace of any age group (+2.1%) in the second quarter of 2025 as they reduced their real estate holdings. The youngest households were the only group with continually decreasing mortgage debt since the end of 2022, as rising interest rates and housing cost pressures reduced home ownership affordability. Average mortgage debt for the youngest households continued its declining trend, albeit at a slower pace, as the year-over-year decrease for the second quarter of 2025 (-2.0%) was less than the decrease for the second quarter of 2024 (-5.1%).
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 during the period from 2020 to 2022 may be paying off their existing mortgage debt balances or moving into more affordable accommodations. As well, some of the youngest households may be prioritizing coping with the cost of living and reducing their debt obligations when financial support from family or other sources becomes available.
Households aged 55 years and older increased their average mortgage debt at the fastest pace, by more than 8.0% in the second quarter of 2025 relative to a year earlier. Older age groups may be increasing their mortgage debt 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
Youngest households reduce debt-to-income ratio amid debt management efforts and weak labour market conditions
The debt-to-income ratio for the youngest households reached 178.1% in the second quarter of 2025, down 5.3 percentage points from a year earlier. The youngest households were the only age group to reduce their total average debt (-1.6%), while their average disposable income grew at the slowest pace of any age group (+1.3% vs. +3.9% for all households), due mainly to a decline in wages.
Households with a major income earner aged 35 to 44 years had the highest debt-to-income ratio of any age group, at 254.2% in the second quarter of 2025, down 2.4 percentage points relative to a year earlier due to strong income gains that outweighed debt accumulation. Households aged 45 years and older had lower debt-to-income ratios, but their ratios increased as debt growth outweighed income gains.
Chart 6
Debt-to-income ratio by age group of major income earner, second quarter, 2020 to 2025
Youngest households have relatively stable debt service ratio despite debt reduction efforts
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. Despite declining interest rates and continued debt reductions for the youngest households, they held their DSR relatively constant in the second quarter of 2025 compared to a year earlier, as they had weak income growth.
Households aged 35 to 44 years had the highest DSR, at 11.2% in the second quarter of 2025, but they decreased their DSR (-1.0 percentage points) at the fastest pace of any age group relative to a year earlier as their income grew strongly while interest paid on debt declined. Although DSRs for each age group were lower in the second quarter of 2025 relative to a year earlier, they remained well above rates that prevailed prior to the Bank of Canada's efforts to manage inflation starting in 2022.
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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 second quarter of 2025. Estimates have also been revised for prior periods to incorporate the latest CSMA benchmarks, including revisions back to the first quarter of 2025.
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 lowest two 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 nominal unadjusted 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 Distributions of Household Economic Accounts for the third quarter of 2025 will be released on January 29, 2026.
Products
The article "Enhancing wealth distributions within the distributions of household economic accounts using a capitalization of income method," which is part of the Latest Developments in the Canadian Economic Accounts (13-605-X), is available.
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 available.
The article "Distributions of Household Economic Accounts, estimates of asset, liability and net worth distributions, 2010 to 2024, 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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