Canadian homeowners are falling behind on payments at a rate not seen in years. According to Equifax Canada’s Q2 2025 Credit Trends Report, the national mortgage delinquency rate climbed to 0.23%, up 1 basis point quarter-over-quarter (+4.5%) and 2 basis points year-over-year (+9.5%).
That might sound small, but the pace of change tells a different story. In the world of credit risk, a rise of this size – especially after years of record-low defaults – is a flashing warning sign.
Just two years ago, in Q4 2022, Canada’s delinquency rate sat at 0.14%, its lowest point on record. Since then, it’s climbed 9 basis points, representing a 64% increase – the sharpest climb in recent history.
A Closer Look: How Canada Got Here
From 2020 to 2022, historically low interest rates kept borrowers afloat. Government stimulus, payment deferrals, and easy credit prevented delinquencies from surfacing even as household debt hit record highs.
But as rates surged starting in 2023, cracks began to appear. By 2025, many borrowers renewing at 5–6% mortgage rateswere facing payments 40–60% higher than their original terms. According to Equifax, the number of Canadians missing payments on all forms of credit (not just mortgages) has risen sharply for five consecutive quarters.
“We’re seeing the fastest increase in delinquency rates in over 30 years,” said Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada, in the firm’s latest quarterly report. “It’s not just first-time buyers — renewals are creating affordability shocks for households who were previously stable.”
Why the Real Problem Is Bigger Than It Looks
While Equifax tracks a large portion of Canada’s mortgage market, it doesn’t capture everything. Several important blind spots mean the real stress may be even higher:
- Big Six banks (RBC, TD, Scotiabank, BMO, CIBC, and National Bank) hold roughly 80% of the country’s mortgages, but some reported delinquency rates above Equifax’s national average, according to Q2 financial statements.
- Private lenders and Mortgage Investment Corporations (MICs) are seeing arrears above 1%, nearly five times higher than major banks, but these aren’t always reflected in national averages.
- Power of Sale listings (lender-controlled home sales) are quietly rising, particularly in Toronto and Hamilton, indicating that many struggling borrowers are already in default — even if those numbers haven’t yet appeared in Equifax’s dataset.
According to CMHC, total household debt in Canada reached 188% of disposable income in 2025 – one of the highest ratios in the G7 – leaving little room for error.
Regional Hot Spots: Ontario and B.C. Lead the Climb
Mortgage delinquencies are increasing fastest in regions where prices skyrocketed during the pandemic boom:
- Ontario: Mortgage arrears rose nearly 11% year-over-year, according to Equifax and CMHC data, with Toronto and Ottawa showing sharp spikes in early 2025.
- British Columbia: Up roughly 9% year-over-year, as many homeowners renewed fixed terms at significantly higher interest rates.
- Prairie provinces have so far seen slower increases, but with oil and resource sector volatility, economists warn that could change in late 2025.
Why It Matters
The rate itself (0.23%) may look small compared to the early 1990s or U.S. subprime crisis levels, but it’s the direction and speed that matter most. Rapidly rising delinquencies often mark the early stages of financial contagion — especially in heavily leveraged housing markets like Canada’s.
Delinquencies typically lag broader credit stress by several months. Rising arrears now may foreshadow higher forced sales and price corrections in 2026, particularly among highly indebted households.
The Bottom Line
After years of ultra-low defaults, Canada’s mortgage market is showing its first real signs of strain. Delinquency rates have surged 64% since 2022, and the climb is accelerating. Between higher renewals, private lending exposure, and record household debt, the risk of further deterioration is rising.
While the numbers remain modest, the velocity of change should give policymakers, lenders, and homeowners pause. In housing markets, trouble rarely starts big – it starts quietly.
References
- Equifax Canada (Q2 2025 Credit Trends Report): equifax.ca
- CMHC – Mortgage and Debt Data Tables: cmhc-schl.gc.ca
- Better Dwelling – Mortgage Delinquencies Report 2025: betterdwelling.com
- Financial Post – Rising Mortgage Arrears: financialpost.com
- BNN Bloomberg – Household Debt Near Record Highs: bnnbloomberg.ca
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