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How Canada has taken on more mortgage debt than any other G7 nation, explained in 5 charts

With consecutive interest rate hikes across G7 nations, borrowing is getting more expensive for those looking to take on a mortgage.

But Canada may be facing more challenges than its G7 peers. looks at recent data by the intergovernmental Organisation for Economic Co-operation and Development (OECD) to analyze where Canada stands in comparison with other G7 nations when it comes to housing affordability, housing prices, and indebtedness.

Central banks in G7 nations have been aggressive in addressing the rising cost of living through consecutive interest rate hikes.

High interest rates typically would mean high debt servicing costs, which eventually increase the cost of everything—from mortgages to credit cards and loans. The thought behind the hike is to discourage consumers from spending. To address the cost of living crisis, the Bank of Canada steadily raised interest rates, reaching 3.75 per cent last month, from just 0.25 per cent in January this year.


When compared with other G7 nations, Canada has the most expensive housing market.

Data from OECD shows that the price-to-income ratio—also known as the measure of affordability—remained the highest for Canada, followed by Germany.

According to the quarterly data released by OECD, Canada's ratio index reached 148.16 in the second quarter of 2022, the highest amongst G7 nations, which means that housing prices grew at a rate of 48 per cent faster than income since 2015. By comparison, house prices in the U.S. grew roughly 40 per cent faster than incomes since 2015.

In a virtual conference in March this year, Sharon Kozicki, the deputy governor with the Bank of Canada, said that Canadian households that have taken out mortgages with high loan-to-income ratios probably aren’t the ones who have a lot of cash in their bank accounts.

She said rising mortgages can trigger a slowdown in household spending and if enough of them reduce spending, it could impact the entire economy, resulting in slow growth and increased unemployment.

“A drop in house prices could worsen these effects,” she said.

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