The wealth gap in Canada has reached a record high of 49% in 2025, according to newly released data from Statistics Canada. That’s the highest it’s been since the agency began collecting this data in 1999. Now, Canadian households in the top 20% of the income distribution own more than two-thirds of the country’s wealth—an average of $3.4 million per household—while those in the bottom 40% hold only 2.8%.
The gap has been increasing steadily since the COVID-19 pandemic, exacerbated by inflation, labour market disruptions, and interest rate fluctuations. Wealthier Canadian households were able to weather economic uncertainty and spiking prices—and indeed, they continue to grow their net worth—while lower-income households experienced losses and took on more debt.
What is the wealth gap?
In this context, the wealth gap, sometimes referred to as the income gap, is “the difference in the share of disposable income between households in the top 40% of the income distribution and the bottom 40%.” Note that the wealth gap doesn’t simply look at household income, but at net worth—and the ability to increase holdings over time, for example through investments, real estate, and savings.
Majors drivers of the wealth gap
Here are some major contributors to the economic situation currently affecting Canadian households.
Labour market conditions
In early 2020, at the beginning of the pandemic, the unemployment rate spiked, creeping over 14% in May. The number of unemployed Canadians started to grow again in 2023, with more newcomers and young people joining the labour force and struggling to find work. These factors continued through 2024, and as of June 2025, the unemployment rate is 6.9%.
According to Statistics Canada data, lower-income households—those at the bottom 20% of the income distribution—were especially affected. This group experienced declining wages, due in large part to reduced hours.
Interest rate changes
The pandemic also drove inflation, making everything from groceries to building materials more expensive. In an effort to stimulate the economy, the Bank of Canada raised its policy interest rate starting in mid-2022. The rate peaked at 5% in July 2023 and didn’t begin to fall again until June 2024. The current policy rate is 2.75%.
Rate changes have positive and negative consequences. High interest rates mean more favourable returns on investments, but they also spike the costs of borrowing—a pressure that disproportionately affects lower-income households. Now that rates have come down, the cost of borrowing is lower, but so are interest rates on investment vehicles like savings accounts and guaranteed investment certificates (GICs).
Investments
Lower-income households “tend to have less diversified investment portfolios that focus on interest-bearing instruments rather than other forms of investments, such as equities,” Statistics Canada reports. Lower interest rates mean less growth. In contrast, wealthier Canadians saw strong growth in their assets, due in part to diversified portfolios.
Real estate
According to the Canadian Real Estate Association (CREA), in April 2025 there was a 3.9% decrease in the selling price of homes sold compared to last year’s numbers. Additionally, nearly 10% fewer homes sold in the same time period.
While a softer real estate market offered an opportunity for less wealthy households to buy, Statistics Canada reports that the mortgage costs outweighed the average value of the holdings. Wealthier households grew their investments and avoided debt financing, which more than offset dips in their real estate portfolio.
Impacts of the growing wealth gap
Statistics Canada’s data shows that in the first quarter of 2025, “the highest income households gained from investments, while the lowest income households’ wages declined.” It’s clear that the same economic forces can produce very different results depending on a household’s net worth.
Wealthier Canadian households were subject to the same inflation, interest rate fluctuations, and softening real estate market as their lower-income counterparts, but their high net worth provided a significant financial buffer. In fact, according to Statistics Canada, the very highest-income households (the top 20% of income earners) increased their disposable income at the fastest pace (9.6%), in part due to increased wages and investment income.
Lower-income families faced the inverse. In the last year, those in the lowest 20% of income earners spent more and were able to save less. Their rate of “dis-saving,” or the amount they needed to dip into existing savings or loans, grew to 3.9%.
The 2025 Consumer Debt Report by the Credit Counselling Society echoes these findings. According to the non-profit organization, nearly 30% feel they’re in a worse financial position than in the previous year. Sixty-four percent of respondents had to use credit or savings to meet their financial obligations, and 36% saw an increase in debt in the last year. The report notes that aside from financial pressures, these burdens negatively impact mental well-being and relationships.
Improve your household’s financial position
A wealth gap disparity of 49% isn’t just a record high—it’s the result of an economic system that multiplies financial advantages and offers few supports for those who need relief.
Currently, many lower-income households can’t pay for everyday expenses, much less increase their net worth. Still, there are strategies all Canadians can leverage to improve their financial position.
Avoid high-interest debt
The high interest rates of credit cards and some types of loans can be financially debilitating over time. Credit card interest rates are typically around 20% (with the exception of low-interest credit cards), and falling behind on payments can lead to spiralling debt. Unfortunately, Canadians are increasingly relying on credit cards to pay for everyday expenses, and many are unable to pay off their bills each month, according to research from credit bureau TransUnion.
Households with no financial buffer might turn to a “payday loan” to meet an urgent financial need. But, with their exorbitant interest and fees, payday loans can put borrowers in a more precarious situation. If a loan is unavoidable, seek out lower-interest options. If you’re carrying multiple debts, debt consolidation—which involves combining debts into one lower-interest loan or line of credit—may be an option.
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Build an emergency fund
A financial buffer can be the difference between paying the bills and needing a loan. Strive to put money away with every paycheque—and don’t let bank fees eat up your savings. Look for a chequing account or high-interest savings account with no monthly fees or transaction fees.
Cut your insurance costs
The price of auto insurance, home insurance, and life insurance is inching upwards, for a range of reasons: rising car theft, climate-related weather disasters, and Canada’s aging population, respectively. Only auto insurance is mandatory in Canada, but if you have a mortgage, your lender likely requires that you have home insurance, too. Many households also opt for additional coverage like extended health and life insurance.
Annual premiums depend on numerous factors, but as a general guideline, many Canadians pay annual premiums around $1,000 per vehicle and $1,000 in house coverage, plus $200 to $300 for life insurance and $1,000 for supplementary medical coverage.
You can keep your premiums down in a number of ways:
- Reviewing your coverage annually to check if you’re over-insured (or under-insured)
- Bundling your home and auto policies with the same insurer for a discount
- Increasing your deductible (the amount you pay out of pocket for a claim before insurance coverage kicks in)
- Comparing insurance quotes from different providers online
- Asking about discounts you may qualify for, such as reduced rates for retirees, veterans, CAA members, and university alumni; home insurers may offer discounts for things like having a centrally monitored alarm system, installing a sewer backwater valve, and being a non-smoker
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Review your real estate goals
For most Canadian households, a mortgage is the biggest loan. Those with variable-rate mortgages or who had to refinance when interest rates were higher have ended up with unexpectedly high debt levels.
Consider working with a mortgage broker or negotiating with your lender before it’s time to renew. In some cases, it may make sense to break a mortgage and switch to a lender with more favourable rates and terms. Read tips about mortgage renewals and mortgage penalties.
Times are tough right now for many Canadians. Looking for savings where you can, reducing the amount of interest on debts, and building a buffer against financial disaster can ease the burden somewhat until conditions improve.
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