Canadians bridged the gap by tapping the wealth in their homes to finance up to one-fifth of consumption growth. As a result, household debt levels rose steadily relative to income through this period.
Since the onset of the crisis, however, real income growth has been weaker and household spending has become more heavily dependent on stimulative financing conditions and high levels of net worth, notably house values. As a consequence, the debt burden has increased further. Moreover, much of the financing for the recent increases in household indebtedness has come from abroad.