Although the vast majority of Canadians remain in debt, the major sources of this debt come from investments in homes and education as opposed to discretionary spending, according to a new survey from Toronto-based Bank of Montreal (BMO) released on Wednesday.

The BMO research finds that 80% of Canadians are in debt, which is unchanged from 2014, and that they owe an average of $93,000. However, the main causes for this debt are what BMO refers to as “smart purchases” or “good debt.”

For example, 49% of Canadians said the purchase of a house is a significant contributor to their debt, with 34% saying it is the main cause. On the other hand, the categories connected to discretionary spending were significant factors for a much smaller group of respondents, with 28% saying their vacation expenses are a big reason for their debt, 22% citing entertainment as a key factor and 20% saying this is the case for home electronics.

“Given the angst about high debt burdens, it’s somewhat comforting to know that Canadians are generally accumulating ‘good debt’ to finance investments in their homes and educations, as opposed to ‘bad debt’ such as discretionary spending on vacations and entertainment,” says Sal Guatieri, senior economist with BMO’s capital markets division, in a statement.

The purchase of a home is the most popular contributor to Canadian debt and more Canadians are buying homes, according to BMO’s research, which indicates home sales are up by 6% in the first half of 2015 vs a year ago.

“Home sales remain resilient across most of the country, led by soaring transactions in Toronto and Vancouver,” Guatieri says. “Of growing concern, however, is that rapidly rising house prices in these two cities could encourage some households to take on larger mortgages than they can handle when interest rates rise.”

Buying a car is the second-most cited contributor to debt, with 46% citing it as a significant contributor to their debt levels.

“BMO Economics revealed that auto sales are at record highs and continue to rise moderately, supported by inexpensive credit, extended loan terms and rising employment rates,” the research states.

One-third of Canadians say home renovations are playing a major role in creating their debt.

“Home renovations and repairs are running at a near 3% real rate, in part due to an aging population, as seniors tend to spend more of their income on fixing up their home than younger age groups,” says Guatieri.

In addition, 32% of Canadians are attributing their debt to expenses from education while 37% of respondents under the age of 35 hold debt from student loans.
Still, the research includes a cautionary note about carrying a heavy amount of any type of debt.

“While rates are at all-time lows, it’s important that Canadians are aware of the risk associated with taking on additional debt, regardless of its purpose,” says Sameh Elrefaei, head of personal lending with BMO, in a statement.

Pollara Strategic Insights conducted the research for BMO through online interviews with 1,001 Canadians between June 19 and June 22.