The Economic Split: Why GDP is Up but Households are Feeling the Pinch

Mortgage Minute: November 28, 2025

This week’s economic data presents a confusing picture for many Canadians. On one hand, the headlines tell us the economy is rebounding. On the other, the data on household finances tells a story of increasing strain.

Here is the breakdown of what matters this week:

1. The “Hidden” Financial Stress

While employment remains relatively stable, household balance sheets are cracking under the pressure of high interest rates and inflation. New data shows that consumer insolvencies have risen 10.6% year-over-year.

More concerning is the data from Equifax, which shows a 14% jump in missed payments on non-mortgage debt (credit cards and auto loans). This suggests that many homeowners are prioritizing their mortgage payments at the expense of other bills. This is a precarious position as we head into the holiday season.

2. A Historic Low for GTA New Homes

The standoff between buyers and builders continues. New home sales in the GTA fell 29% in October compared to last year, marking a 10-year low. With inventory reaching record highs, the market is heavily tilted in favor of buyers who can afford to wait.

3. The Macro Contradiction

Despite these household challenges, Canada’s GDP grew at an annualized rate of 2.6% in Q3, beating economist forecasts. This growth was largely driven by government spending and housing investment, rather than consumer spending, which actually dropped per capita.