Finance Committee on March 26th, 2026

[The Chair, Liberal, Karina Gould]

I call this meeting to order.

Welcome to meeting number 31 of the House of Commons Standing Committee on Finance.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

This morning, pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, March 9, 2026, the committee commences its study of household debt in Canada.

I would like to welcome our officials.

From the Department of Finance, we have Brian Torgunrud, senior director, economic analysis and forecasting; Matthew Boldt, the acting senior director for housing finance; and Mark Radley, the director of consumer affairs.

Thank you for joining us this morning, gentlemen. You will have five minutes for your opening statement.

Thank you.

[Brian Torgunrud, Senior Director, Economic Analysis and Forecasting, Department of Finance]

Thank you, Madam Chair and honourable members.

Thank you for giving us the opportunity to appear before you. We're pleased to be here today to discuss with you the issue of consumer debt.

Household debt in Canada remains elevated. We recognize that many Canadians are experiencing financial pressure, particularly following a period of high inflation and higher interest rates. At the same time, it's important to take a balanced view. While indicators of household financial stress have increased, most households continue to meet their financial obligations, and key metrics such as credit arrears and insolvencies, although up from pandemic-era lows, remain broadly in line with historical averages.

In addition, most mortgage holders have adjusted to higher interest rates since 2022, often by reducing spending, relying on savings or refinancing their mortgages, and they have continued to make their payments. Overall, this suggests that, despite increased pressures, the household sector has remained resilient, and macroeconomic and financial system risks stemming from household vulnerabilities remain low.

However, this is an important issue to Canadians with meaningful implications for the economy, and it is something we will continue to monitor closely. There are three officials from two branches of the Department of Finance here today, and we are prepared to speak to the department's role as it relates to this issue from our perspectives.

From my perspective of economic analysis and forecasting, as the federal government's lead on economic and fiscal policy, the Department of Finance is responsible for monitoring Canadian and global economic developments. We track a broad range of indicators from various sources. For example, we track GDP growth, labour markets, inflation, financial conditions and household balance sheet indicators such as indebtedness and net worth.

The department assesses the implications of these developments for the economic outlook and for fiscal planning. Additionally, as part of the department's responsibility for financial sector policy, we monitor mortgage indebtedness and signs of mortgage hardship as part of our broader surveillance on financial system vulnerabilities and risks.

Responsibility for monitoring and managing these risks is shared across the federal system. We work closely with Canada's federal financial sector agencies—OSFI, CMHC, FCAC and the Bank of Canada—on these issues.

The department also oversees the policy framework for federally backed mortgage insurance, including parameters such as minimum down payments, maximum amortization periods and insured property value limits. We also supported the previous government in developing the Canada mortgage charter, which it announced in 2023 and enhanced in 2024.

Similarly, the department is also responsible for the financial consumer protection framework, the consumer protection framework for banks. This framework includes protections such as requirements for clear disclosures, cancellation rights for certain products, alerts when a customer is reaching a credit limit, express consent prior to providing a customer with a credit product or increasing their credit limit, and the fair treatment of customers.

OSFI, as the provincial regulator of federally regulated lenders, provides supervisory intelligence on mortgage portfolio risks. It publishes an annual risk outlook, which provides an overview of the current risk environment, the top risks currently faced by the Canadian financial system and the actions OSFI is taking in response.

The Bank of Canada assesses broader financial system vulnerabilities and publishes an annual financial stability report that assesses the resilience of the Canadian financial system and focuses on key risks that could undermine its stability.

FCAC protects consumers by supervising banks' compliance with market conduct obligations and monitoring consumer-reported financial stress. It has issued the guideline on existing consumer mortgage loans in exceptional circumstances and tracks trends in borrowers' financial well-being through its monthly financial well-being monitor.

The department's perspective on consumer debt is necessarily macro, reflecting its responsibility for economy-wide analysis across a broad range of fiscal and economic issues. Within this context, perspectives from other stakeholders and specialized agencies can complement this view by shedding light on recent developments in consumer debt at the borrower level.

Thank you very much. My colleagues and I would be pleased to answer any questions you may have or point you to the appropriate stakeholder who can.

[The Chair, Liberal, Karina Gould]

Wonderful. Thank you so much.

We will begin this round of questioning with Mr. Kelly, for six minutes please.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

In your remarks, you mentioned consumers who have to adjust—I guess that is the euphemism we might go to—to the higher interest rate environment with maturing mortgages. You said that consumers have responded to this without significant defaults because they are reducing spending on other things, refinancing their mortgages and exhausting their savings.

While it's important that people are able to pay their mortgages and we certainly need to see Canadians able to repay their debts, if Canadians are responding to a higher payment environment only by reducing spending, refinancing and exhausting their savings, they're not getting ahead. What does this say to the quality of life of Canadians, if those are the reasons we haven't seen massive defaults in the face of higher costs?

[Brian Torgunrud]

The key thing I would say here is that among these three reactions that consumers may have taken in the face of refinancing at higher rates, or dealing with higher mortgage rates, is not that they have exhausted savings but that they had significant savings already.

What we saw, particularly during the pandemic and the period prior to the run-up in interest rates, was a large-scale increase in other types of financial assets. I think, on an aggregate basis, if you look at the financial assets that households hold, it represents something like four and a half times the value of outstanding debt. Therefore, the sector as a whole had a fair amount of flexibility and a fair cushion built in to make those adjustments.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Again, what we're seeing is a reduction in savings. What isn't happening and what I didn't hear in the explanation—which I think would match with what all MPs are hearing from their constituents—is an increase in consumers' ability to repay. Per capita GDP has been flat for a decade. The only thing that would allow Canadians to take on more debt or absorb higher debt service costs that won't result in a loss of quality of life—an inability to spend money on other things or to save and to get ahead for retirement, or for other purposes, or to simply keep spinning their debt—would be a rise in their actual income and ability to pay debt. Canadians can only exhaust savings, refinance or cut spending for so long. Any household, if those are the three things that are keeping it going, is going to run out of room at some point.

Therefore, what does the consumer indebtedness say about the need for a more productive economy that can support the debt loads we've seen?

[Brian Torgunrud]

It's an excellent question. I think it's one that the department and the government fully agree with—the concept that we need a productive economy, that we need real gains in income. Nonetheless, to be clear, we have had real gains in income. We have had wages that have outpaced inflation. I think households—

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Over the last 10 years, has per capita GDP in Canada gone up or down?

[Brian Torgunrud]

It has been fairly flat.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Yes, it's been completely flat. We're not seeing the increase in Canadians' incomes that would support higher debt. It's been flat for a decade.

I had other questions that were not related to this, but let's stay on this.

People are now spending savings and assets that inflated during the COVID period. Is this real estate equity? Is this other savings? Do you have information about that?

[Brian Torgunrud]

It's financial assets. A lot of it was held in currency and deposits.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Kelly.

We will continue now with Mr. Sawatzky for six minutes.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you, Chair, and thank you to the witnesses for coming today.

Given your monitoring of the overall financial position of Canadian households, what areas of vulnerability are you most focused on when you assess risk for financial stability?

[Brian Torgunrud]

I can start, and Matt can jump in.

I think we follow research that has been published by the Bank of Canada in its financial stability review. That publication explicitly tries to identify vulnerabilities in the financial system and in the macroeconomy from this. We've seen there that the biggest strains are concentrated in a relatively small share of the household sector: vulnerable groups, renters, younger households, lower-income households and some newcomers. It's not the case that all households are necessarily stressed or vulnerable in that way.

They also noted that about 8% of households are living paycheque to paycheque, and these folks are particularly exposed to shocks. Data from the survey they presented said that about 10% are facing financial stress that may not be sustainable.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Can you speak to how worldwide economic disruptions have affected this, such as COVID, international wars and things like that?

[Brian Torgunrud]

Clearly, there are a lot of different channels through which these events have had an impact.

As I mentioned previously, COVID itself had a counterintuitive result. Because of high levels of government support, the household sector ended up accumulating savings and ended up in a fairly strong financial position at the end of it, but clearly, when you go into a situation of economic uncertainty, such as what we've faced over the last year and a half, it is reflected in less confidence and willingness to make major purchases and less willingness to borrow. It also means less willingness to spend, so you have these knock-on effects of generalized weakness in the economy, which itself will have implications for incomes and for the financial health of the household sector itself.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Would tariffs from the United States affect that as well?

[Brian Torgunrud]

Yes, very much so.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Your department sets eligibility rules for federally backed mortgage insurance. What factors do you consider when determining minimum down payments, maximum amortization periods or property value limits?

[Matthew Boldt, Acting Senior Director, Housing Finance, Department of Finance]

My name is Matthew Boldt. I work on the housing finance team. We provide advice to the Minister of Finance with respect to those responsibilities.

Overall, you're trying to strike a balance between making mortgage insurance available to support home ownership and taxpayer risks to the housing sector when the federal government supports more risk through mortgage insurance. That's the key balance there.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you.

How does the department balance its objectives of maintaining financial stability, supporting affordable access to credit and ensuring consumers are protected in a changing economic environment?

[Matthew Boldt]

I can go a bit further on that and say that the department works with a number of the agencies that Brian mentioned in his opening remarks. We work closely with the Bank of Canada, with the Office of the Superintendent of Financial Institutions and with the Financial Consumer Agency of Canada to discuss how we are doing and to share analysis in terms of how we're balancing those objectives.

To give one example, in terms of financial stability and the prudential regulation of the banking sector, OSFI, the Office of the Superintendent of Financial Institutions, has supervisory guidance for bank mortgage lending, for uninsured mortgage lending. The Minister of Finance sets the rules for mortgage insurance for mortgages where the banks come to CMHC or private mortgage insurers for federally backed mortgage insurance. The Financial Consumer Agency of Canada has guidance and supervision that it provides, including a mortgage hardship guideline that the FCAC introduced in 2023, which sets out expectations for how lenders are supposed to be identifying borrowers who are facing severe financial stress and what sorts of flexibilities lenders should be working through with those borrowers.

[The Chair, Liberal, Karina Gould]

You have 15 seconds left.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

I have another brief question. To what extent do you think increasing amortization from 25 to 30 years improves affordability for households?

[Matthew Boldt]

There are two things it can do.

First, increasing your amortization can reduce the monthly payment on your mortgage—