Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, third quarter 2025
Released: 2026-01-29
The income gap increased in the third quarter of 2025 as lower income households were negatively affected by declining interest rates and self-employment income, while net saving worsened the most for middle income households due mainly to weak wage gains. The wealth gap grew as strong financial market gains benefited the wealthiest.
Income gap increases amid weakening labour conditions and a booming equity market
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—reached 47.5 percentage points in the third quarter of 2025, up from 46.3 percentage points in the same quarter 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 stood at 2.5% at the end of the third quarter of 2025, down 1.75 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.
Labour market conditions can also have varying impacts on household income. Wages grew by an average of 2.7% in the third quarter of 2025 relative to a year earlier, down from an annual increase of 3.4% in the third quarter of 2024. Wage earnings were notably weak in the third 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 transportation and storage, information and cultural industries, and professional and personal services.
The lowest income households (bottom 20% of the income distribution) were the only income group that did not increase their average disposable income in the third quarter of 2025 (-0.5%), as a relatively strong wage gain (+$152 or +5.7%) was offset by reductions in self-employment income (-$67 or -3.4%) and net investment income (-$78 or -16.0%). The lowest income households reduced their net investment income, as a decline in investment earnings (-$208 or -21.1%), mostly from negative returns from interest-bearing deposits, outweighed lower interest payments (-$130 or -8.8%).
Chart 1
Change in average disposable income for lowest income quintile, including contribution of each income component, third quarter of 2025 relative to third quarter of 2024
Average disposable income for the highest income households (top 20% of the income distribution) increased at the strongest pace in the third quarter of 2025 relative to a year earlier (+4.3%), owing mainly to increases in both wages (+3.1%) and self-employment income (+13.2%). The value of households' equity and investment fund holdings posted a strong gain in the third quarter of 2025, and the highest income households were the only income group that increased their investment earnings (+2.7%), as they tended to benefit more from equity markets rather than from interest-bearing deposits relative to lower income households.
Chart 2
Change in average disposable income for highest income quintile, including contribution of each income component, third quarter of 2025 relative to third quarter of 2024
Net saving worsens most for middle-income households due mainly to weak wage gains
On average for all households, net saving worsened in the third quarter of 2025 as growth in consumption expenditure (+3.7%) outpaced growth in disposable income (+2.7%), due mainly to relatively weak gains in wages that were more than offset by strong growth in spending on items such as housing and utilities, insurance and financial services, and transportation and storage.
Net saving worsened the most for households in the middle 20% of the income distribution in the third quarter of 2025 relative to a year earlier (-56.6%), as their average disposable income increased slightly (+0.7%) while their average consumption expenditures grew markedly (+4.2%).
The highest income households recorded the strongest increase in net saving (+6.7%) in the third quarter of 2025, as all forms of primary income—including earnings from employment and investment—outweighed growth in spending.
Chart 3
Average household net saving by income quintile
Wealth gap increases as wealthiest benefit most from strong equity market gains
The wealthiest households (top 20% of the wealth distribution) accounted for almost two-thirds (65.5%) of Canada's total net worth in the third quarter of 2025, averaging $3.5 million per household. Meanwhile, the least wealthy households (bottom 40% of the wealth distribution) accounted for 3.1% of total net worth, averaging $82,100 per household. Overall household net worth increased in the third quarter of 2025 relative to a year earlier (+5.5%), entirely on account of a strong gain in financial assets (+9.6%), mainly from equity markets. Gains in the value of real estate (+0.4%) and consumer goods (+3.1%) were offset by increases in their associated liabilities (+4.0%).
The gap in wealth between households in the top 20% and the bottom 40% reached 62.4 percentage points in the third quarter of 2025, up 0.5 percentage points from a year earlier.
The least wealthy households grew their net worth at the slowest pace of any wealth group in the third quarter of 2025 (+2.2% vs. +5.5% for all households), due to a below average gain in the value of their financial assets (+6.1%). Since the least wealthy were more active in the housing market, through which they increased their mortgage debt to finance home purchases during a period of low growth in average housing values, the increase in the value of their real estate assets (+3.3%) was more than offset by the increase in their mortgage costs (+6.3%).
In contrast, the wealthiest households increased their net worth at the fastest pace in the third quarter of 2025 (+6.3%), as they had the strongest growth in the value of their financial assets (+10.6%) while their mortgage debt (+2.1%) grew at the lowest rate of any wealth group.
Chart 4
Change in average net worth for two lowest wealth quintiles, including contribution of each wealth component, third quarter of 2025 relative to third quarter of 2024
Youngest households increase wealth the most through gains in financial and housing markets
Average wealth for the youngest households—those aged less than 35 years—grew at the fastest pace of any age group in the third quarter of 2025 relative to a year earlier (+7.4%), mainly because of a strong increase in the value of their financial assets (+13.2% vs. +9.6% for all households).
For the first time since the fourth quarter of 2022, the youngest households increased their year-over-year mortgage debt, although it grew at the slowest pace (+1.8% in the second quarter of 2025 and +1.9% in the third quarter of 2025) of any age group. During a period of stable home prices and declining interest rates, the value of their real estate holdings increased in the third quarter compared with a year earlier (+$2,994), and that increase outweighed the growth in their mortgage debt (+$2,368).
The trend in housing wealth for the youngest households in the third quarter of 2025 contrasts with previous periods. From the third quarter of 2022 to the third quarter of 2024, along with relatively higher house prices, growing inflationary pressures and higher interest rates, the value of real estate and the associated mortgage debt holdings for the youngest households consistently declined.
Prior to the recent uptick in their mortgage debt in the third quarter of 2025, households in the youngest age group may have reduced their mortgage balances for various reasons. Prospective homeowners may have turned away from the housing market due to affordability concerns, while existing homeowners may have paid down their existing mortgage debt balances or moved into more affordable accommodations. As well, some of the youngest households may have prioritized coping with the cost of living and reducing their debt obligations through various ways, including through financial support from family or other sources.
Households aged 55 years and older increased their average mortgage debt at a faster pace than younger households, by more than 6.0% in the third quarter of 2025 relative to a year earlier. Older age groups may be increasing their mortgage debt to buy 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 households reduce debt-to-income ratio amid debt management efforts
The debt-to-income ratio for the youngest households stood at 167.2% in the third quarter of 2025, down 1.3 percentage points from a year earlier. Households with a major income earner aged 35 to 44 years had the highest debt-to-income ratio of any age group, at 245.4% in the third quarter of 2025, down 3.9 percentage points relative to a year earlier. For households in these age groups, reductions in the debt-to-income ratio were due to strong income gains that outweighed debt accumulation.
Households aged 45 years and older had relatively low debt-to-income ratios in the third quarter of 2025, but their ratios increased as debt growth outweighed income gains.
Chart 6
Debt-to-income ratio by age group of major income earner, third quarter, 2020 to 2025
Youngest households increase debt service ratio despite interest rate reductions
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 for the youngest households, their DSR reached 10.0% in the third quarter of 2025, up 0.2 percentage points from a year earlier, as the interest on their debt grew faster than income.
In addition to home purchases in the third quarter of 2025, the youngest households may be renewing or refinancing their remaining debt at higher interest rates relative to what they had acquired at the beginning of the COVID-19 pandemic, when interest rates were lower and housing was more affordable.
Households aged 35 to 44 years had the highest DSR, at 10.6% in the third quarter of 2025, but it declined (-1.0 percentage points) at the fastest pace of any age group relative to a year earlier as their income grew strongly while their interest paid on debt declined. For households in each age group, DSRs remained well above rates that prevailed prior to the Bank of Canada's efforts to manage inflation starting in 2022.
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 2025. Estimates have also been revised for prior periods to incorporate the latest CSMA benchmarks and various other inputs, including revisions back to 2021 for the income, consumption and saving series, and back to 2010 for the wealth series.
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 fourth quarter of 2025 will be released on April 13, 2026.
Products
The article "Distributions of Household Economic Accounts, estimates of asset, liability and net worth distributions, 2010 to 2025, technical methodology and quality report," which is part of the Income and Expenditure Accounts Technical Series (13-604-M), is now 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 "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.
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.
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