Finance Committee on April 20th, 2026

[The Chair, Liberal, Karina Gould]

I call this meeting to order.

Welcome to meeting number 34 of the House of Commons Standing Committee on Finance.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders.

One of our witnesses, Mr. Peter MacKenzie, will be testifying on Zoom.

Before we continue, I would ask all in-person participants to consult the guidelines written on the cards on the table. These measures are in place to help prevent audio feedback incidents and to protect the health and safety of all participants, including the interpreters. You will also notice a QR code on the card, which links to a short awareness video.

I would like to remind participants of the following points.

Please wait until I recognize you by name before speaking. For those participating by video conference, you can click on the microphone icon to activate your mic. Please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen you can select the appropriate channel for interpretation: the floor audio, English or French. For those in the room, you can use the earpiece and select the desired channel.

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Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, March 9, 2026, the committee is resuming its study of household debt in Canada.

However, before we begin, I see that Mr. Garon has a point of order.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Yes. This will be very quick, Madam Chair.

There have been consultations among the parties. I don't know if we need a motion, but I wanted to propose that we leave the pre-budget consultation portal open for an additional month, until Friday, May 29, so more groups can participate, without that having an impact on the schedule the committee has already established.

I think the parliamentary secretary wants to add something.

[The Chair, Liberal, Karina Gould]

Go ahead, Mr. Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

We discussed this in advance. I'm definitely supportive of the idea of having the portal for pre-budget briefing submissions open for longer.

The only thing I want to double check is that we have enough time for the analysts to do some analysis before we break. I think June 22 is officially the last sitting day. Sometimes the House rises a bit earlier than that before the summer.

Am I wrong? Is it the 19th?

Pat Kelly is correcting me here. In this case, I totally don't mind. If it's the 19th, I apologize.

Whatever date it is, I just want to make sure with the analyst, Chair, just to be assured that the analysts will have time to produce a kind of “what we heard” report before we rise for the summer. I would value having that.

Is three weeks enough time? It's just a clarifying question.

[The Chair, Liberal, Karina Gould]

There are a couple of points, because the analysts are just hearing this for the first time. They need to talk about it and see what it is.

The only comment I would make is that there's also the issue of translation. Right now, the deadline is set for April 30, and we've allowed a month for getting the briefs translated. If we extend the deadline, we should plan to extend the deadline for translating any briefs received after April 30. We could add another three weeks. The committee must take that into consideration. Perhaps we can come back to this at the end of the meeting to discuss it.

What do you think, Mr. Turnbull?

[Ryan Turnbull, Liberal, Whitby, ON]

With that in mind, perhaps if other members are agreeable—and Jean-Denis, I hope this is agreeable to you—maybe we could suggest May 22. That would give us three more weeks but still allow roughly a month for the analysts to do their work, which is what I think is the allotted timeline they expect.

[The Chair, Liberal, Karina Gould]

Are the Conservative members okay with that?

Seeing agreement like this in the committee is so nice. Thank you, everybody.

We'll extend the deadline to May 22. Maybe we'll encourage folks, if their briefing is ready by April 30, to submit it by April 30. If there are people who need more time, we'll allow briefs to be received until May 22, while encouraging folks to do so earlier.

Thank you, everyone.

Returning to the meeting at hand, I would like to welcome our witnesses.

For the first hour, we have Mr. Ronald Butler. We also have Mr. Peter MacKenzie, senior policy analyst from the C.D. Howe Institute, and Ms. Vasiliki Bednar, managing director from the Canadian SHIELD Institute for Public Policy.

Each of you will have five minutes for your opening remarks, and we'll go in the order I mentioned.

Mr. Butler, we'll start with you, please.

[Ronald Butler, Principal Broker, As an Individual]

Thank you, Madam Chair.

I'm always honoured to be here. I'm an old man who has followed politics my whole life, and it's still a thrill. Thank you for inviting me. I enjoy being here.

Our mortgage brokerage operates in three provinces—Alberta, British Columbia and Ontario. We get lots of calls. We're talking about 1,700 to 2,500 calls a month from people who have mortgage issues or renewals. It's chiefly renewals. This is the biggest time for renewals ever. There are more mortgage renewals happening this year than ever before in the history of Canada.

Overwhelmingly, they illustrate the nature of our economy today in Canada. They illustrate a K-shaped economy. We have a certain number of people who call us, and they're quite comfortable with the increase they're getting. Because they got their mortgage five years ago, 65% to 70% of them are getting an increase in their mortgage. Rates were incredibly low, and they're higher now. People had a 1.69%, five-year fixed mortgage in 2021, and now they're getting about 4%. That's a significant rise.

The group of people at the top of the K are somewhat annoyed and a little concerned, but they're fine with it. They can easily handle this mortgage rate increase. The payment increase is never the same amount. It's always a bit lower, percentage-wise, than the actual rate increase, so they can manage it. However, for the majority of people at the bottom of the K, it's a problem. In Canada today, we're all aware that inflation has eaten into family budgets. When we then move it forward into a 20% or 22% increase, let's say, in their mortgage payment, that is a different world. It's a meaningful change, and it's a problem.

We're approached to do restructuring and refinancing, to change amortization and to lower payments. What really hits us when we do this is that there's becoming an incredible importance to when you bought your house. That sounds crazy in a big, western country like Canada, but if you bought your house in 2015 and prior, you're probably pretty good, if you didn't refinance. You got a good price on your house when you bought it, you have a smaller mortgage and you are in pretty good financial shape. However, if you bought in 2018 and onwards, particularly in some provinces, you have a very expensive house and a large mortgage, and you're not in such great financial shape. In fact, in some cases, 50% of your net after-tax income is going to mortgage payments, property tax, other sorts of utilities and other types of payments.

There's something fundamentally wrong about that, if you think about it. Should it just be this strange bit of magical luck of when you were born? I'm a boomer, so I always make fun of boomers. We're all just people who don't realize how lucky we were.

That's something interesting, though. That should be interesting to everybody in government. At that moment when you were the right age and you bought that house in the 1980s, the average first-time buyer was 27 years old. Last year, they were 40. That should be meaningful to everybody in government, that we are denying a lot of young people the chance to own a home. If you have to wait until you're 40, you're not young anymore. At least, I don't think you feel young. Twenty-seven is a much better age to be buying your first home, and that's realistic.

Again, my thanks to the committee. If there are any questions, I'm happy to take them.

[The Chair, Liberal, Karina Gould]

Thank you very much, Mr. Butler.

Mr. MacKenzie.

[Peter MacKenzie, Senior Policy Analyst, C.D. Howe Institute]

Madam Chair and members of the committee, thank you for the invitation to testify today.

My name is Peter MacKenzie. I'm a senior policy analyst at the C.D. Howe Institute, where I lead the financial services research initiative and the financial regulatory excellence initiative.

My remarks today will draw on the institute's work on household balance sheets, financial stability and the housing market.

Canada has G7-leading household debt levels and rising consumer insolvencies. These are concerning, but they do not signal a systemic crisis. The banking system is resilient, aggregate household net worth is at a record high, and pressure on household cash flow has eased from its 2023 peak.

Severe pressure is concentrated in specific groups, including younger Canadians and highly leveraged homeowners in large cities like Toronto and Vancouver. Policy response should be calibrated to that distributional reality.

Let me start first with the aggregate picture. The measure most often cited in public debate about household debt is on household debt relative to disposable income. This ratio rose from about 114% in 2000 to a peak of 188% in 2022. It has since declined to 173%. That number alone does look alarming, and it is. Households have more debt than income.

The measure that actually tracks a household's capacity to pay is the debt service ratio, or DSR. The DSR is the share of household income going to principal and interest payments on outstanding debt. When interest rates fall or income rises, a household can carry more debt without a larger share of income going to payments. The DSR was largely flat over the same period that household debt income ratio rose dramatically. The DSR stood at 15% at the end of 2019, climbed to a record 15.2% in 2023 as the Bank of Canada hiked rates, and has since eased to 14.5% in the fourth quarter of 2025 as rates have come down.

The banking sector has absorbed the shock. In fact, the IMF's 2025 financial system stability assessment found Canadian banks and non-bank financial institutions generally resilient to severe solvency and liquidity shocks. OSFI's annual risk outlook, released earlier this month, identifies real estate-secured lending among its top risks while concluding that institutions remain well positioned to navigate the environment. Both documents point in the same direction of system-level resilience with some serious tail distributional stress.

Now, looking at that tail risk and part where there is stress or where the household distribution is hurting, we see younger Canadians. Looking at the Bank of Canada's Canadian survey of consumer expectations for the fourth quarter of 2025 shows that Canadians aged 25 to 54 reported a record 27% probability of missing a debt payment. Nearly half of those aged 18 to 24 expected to miss a payment. Canadians aged 55 and older reported just under a 1% chance of missing a payment. Household net worth reached a record $18.6 trillion at the end of 2025, but the wealthiest 20% of households hold the majority of that increase. Younger Canadians who did not yet own assets or homes have participated little in the gains.

I'll make a further point on the rise in insolvency filings. A filing can mean two very different things. A household is cash flow insolvent when it cannot meet monthly payments out of its current income, even if its assets exceed its debts. It is balance sheet insolvent when its debts exceed its assets outright.

A homeowner in Toronto, for instance, who might be facing a payment shock at renewal, is more likely to be cash flow insolvent. The equity in the home is there, but the monthly room to make the payment is not. A renter in their 20s carrying unsecured debt without assets is more likely to be balance-sheet insolvent. These two situations call for different policy responses.

Finally, this brings me to my three recommendations.

First, federal agencies should centre their public reporting on household financial health on the debt service ratio and how it varies across income, age and region, rather than other indicators such as debt-to-GDP or debt-to-income ratios. The breakdown will show that stress is concentrated in two groups, highly leveraged homeowners and younger Canadians.

Second, the Office of the Superintendent of Bankruptcy should publish statistics that distinguish cash flow insolvency from balance sheet insolvency.

Third, federal infrastructure, immigration settlement and transfer design should be oriented towards growing mid-sized Canadian cities into economic alternatives to larger cities like Toronto and Vancouver. Canadians who move to those cities for work are more likely to take on outsized mortgages to afford a home, and each buyer joins a highly leveraged segment. Policies often focus on demand-side measures that shift where pressure lands, but they do not reduce that pressure.

Adding supply only within larger cities does not resolve affordability on its own, because in-migration from smaller centres follows—

[The Chair, Liberal, Karina Gould]

Thank you, Mr. MacKenzie. We'll look forward to continuing the conversation during the questions.

Ms. Bednar, you now have five minutes.

[Vasiliki Bednar, Managing Director, The Canadian SHIELD Institute for Public Policy]

Thank you, Madam Chair and members of the committee, for the opportunity to appear. My name is Vass Bednar. I'm the managing director of a new think tank, the Canadian SHIELD Institute, which is focused on securing our economic sovereignty.

I'm appearing today to elaborate on an essay that we published in the Walrus magazine. It was titled “How 'Buy Now, Pay Later' Seduced a Generation—and Trapped It in Debt”. We also proactively submitted a brief to this committee on this invisible problem of buy now, pay later in Canada.

A country loses economic sovereignty when it loses visibility into how households are coping and when private credit products start compensating for what is fundamentally a public policy failure. Buy now pay later is more than just a trendy checkout feature; it's a new layer of household debt infrastructure, and right now too much of it is invisible. Buy now pay later is often marketed as budgeting help for young people, but in practice it's microlending at the point of sale. It lets people typically split a purchase into four or more payments and defer the full cost of something major that they'll buy. I know you know what it is.

This sounds pretty harmless when we're talking about something like a sofa, a laptop or a one-time emergency purchase, but the concern that we raised and wanted to bring forward is that there's evidence that buy now pay later is increasingly being used to bankroll everyday routine needs: groceries, clothes, household goods and other everyday expenses.

This tells us two important things. The first is that we have that data blind spot. Canada has yet to clearly define buy now pay later in our legislative infrastructure. That means it doesn't show up in the numbers that my colleagues appearing today, my friends, cited, and that's a problem. Other jurisdictions have moved much faster to have legislative infrastructure reflect those realities.

Second, buy now pay later is symptomatic of a deeper prosperity problem. People aren't using these products because they're financially careless. They're using them because the math is not mathing. Paycheques are too low and costs are too high, so people are plugging holes. We need to pay attention to that and not demonize it. That is why we think that this committee should resist treating buy now pay later as a narrow consumer protection issue. Yes, we need more disclosure and understanding, but we also need to step back and ask ourselves why a product that was designed for larger discretionary purchases is becoming part of how people manage their everyday lives, including being used for groceries.

Our debt challenge in Canada is symptomatic of the broader prosperity and productivity challenge that many have been thinking about for quite some time. If wages don't keep up with costs, debt becomes a bridge. Rents, groceries, telecom bills, transportation and basic services have been rising faster than incomes. People are reaching for this credit product. Our productivity is weak, investment is thin and our living standards have stalled. We think, by now, that is a clear example of that shift.

Our recommendations are twofold. One is that this committee should identify and continue to pursue that gap. It's not that Canada has never considered buy now pay later or that a committee has never heard of it. We just haven't gotten to the finish line. If anything, we sometimes hide behind federalism a bit. We say that certain jurisdictions say it's not their key file or it's not their key element.

Second, we could maybe stretch the mandate of the study a bit. Debt is a prosperity signal too, and rising reliance on a short-term consumer credit product that's increasingly invisible and increasingly targeted to young people should prompt bigger questions about wages, market concentration, competition, productivity, housing costs and whether public policy has allowed too many essential markets to become too expensive.

Canadians cannot manage what policy-makers can't measure, but we also can't regulate our way out of a prosperity problem just by polishing our data dashboard. Buy now pay later needs to show up in our accounting, but the bigger question is why so many people need it in the first place.

Thank you so much. I look forward to the questions.

[The Chair, Liberal, Karina Gould]

Thank you so much, Ms. Bednar. Thank you to all of our witnesses.

We will begin now with Mr. Kelly, for six minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

Mr. Butler, some witnesses have testified that Canadians are paying their debts by refinancing and stretching them out over a longer period of time, by exhausting their savings and by skimping on other purchases, including basic necessities. Is this a sustainable way to deal with increasing indebtedness?

[Ronald Butler]

It is not sustainable. It constantly proves to be unsustainable. We have observed in the last 18 months a somewhat alarming growth in power of sale transactions and bank-ordered sale transactions.

Mortgage default rates have continued to increase. We anticipate that mortgage default rates will increase this year as well, throughout the year and potentially into next year. There is just not any good way to handle the extremely large mortgages people took on in 2020, 2021 and the first quarter of 2022. As soon as the rate goes up, unless incomes have soared, there's no easy way to manage that.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Really, the only way out of the debt scenario we have, which I would say also extends to the federal and even provincial deficits, is a more productive economy with higher wages, more economic growth and more economic activity. Until people's wages and salaries can grow into servicing these debts, it's just a spiral.

[Ronald Butler]

You know, the biggest change in the 30 years I've been in the mortgage business is that much more normal-salaried people could buy houses 30 years ago. The difference is striking. It was quite normal for the produce manager at a grocery store and a part-time nurse to be able to easily get 5% together to buy a home and comfortably manage it quite successfully. Those days are gone. The people we see buying houses today are almost consistently in the top 10% or 15% of earners in the country. That's in Ontario, anyway, and certainly British Columbia. Those are the people buying houses, or else they're getting massive assistance from their parents, who are using some of the accumulated equity in their homes to assist their kids in buying a home.

I don't mean to sound nostalgic, but I far preferred the old way, where ordinary people making ordinary wages could go out and buy a home. Obviously, there's been some stagnation in wages.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

How long would it take a normal person such as you've described—a person with a good, solid, full-time job—to save up the minimum down payment on a home in Toronto?

[Ronald Butler]

Well, if we look at just the GTA, particularly in Toronto, the reality is that they never could. That's the reality today. Even with falling prices, even with prices that have fallen 26% in the GTA, they still couldn't. If you're running an income of about $110,000 to $115,000, you have to pay rent. You have to eat. You have to live.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

You have to pay taxes.

[Ronald Butler]

You pay taxes. You could not possibly accumulate a satisfactory down payment for a house price that's just under $1 million.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Even if you could, would you be able to qualify for the mortgage?

[Ronald Butler]

You would not.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay. So a normal person with a normal job cannot save up the down payment or qualify for the mortgage. We're now back to mom and dad, who—

[Ronald Butler]

In Ontario they are absent from our practice, yes.