07:07 AM EDT, 03/17/2026 (MT Newswires) -- Canada's household debt-to-disposable income ratio has been drifting higher for over a year, and most recently hit a seasonally adjusted 177.2% as of Q4, said Bank of Montreal (BMO).

That's off the record high from 2022, but still historically elevated -- 20 years ago, for example, the ratio was below 140%, noted the bank.

The recent upturn is occurring as past rate cuts support some additional borrowing, although demand for mortgages -- the largest type of debt -- remains subdued as housing affordability constrains buyers, stated BMO.

High debt levels mean Canadian households are particularly sensitive to changes in interest rates, added BMO. With the Bank of Canada expected to keep policy rates on hold through this year, indebtedness isn't a major concern for policymakers.

However, once the BoC starts thinking about moving off the sidelines, it will be watching to see how households respond, according to the bank. For now, the focus is more on the risks from the oil price shock versus trade uncertainty and the softer economic data of late.