Canada Plunges into Credit Crunch as Household Debt Hits $2.64 Trillion

Canada is facing a credit crunch as household debt reaches $2.64 trillion in Q2 2026, up 4.6% from last year. According to TransUnion, this growth is driven by rising balances, not new loans, and has led to soaring insolvencies and mortgage delinquencies.

The job market also saw a setback in August, shedding 41,700 jobs, but employment remains up 216,500 jobs from last year. However, most of these added jobs are temporary roles, making up only 13.5% of total employment, raising concerns that the recent growth may be fleeting.

The Bank of Canada held its key policy rate steady at 2.25%, but expressed concern over inflationary factors such as strong GDP, sticky CPI, and tariffs.