According to new national data and recent reports from the Bank of Canada, nearly 8 out of 10 dollars Canadians owe is tied to mortgage debt, and that number keeps climbing as mortgage renewals hit record-high rates.
Many households are facing:
- Higher monthly payments at renewal
- Longer amortizations (some now exceeding 35 to 40 years)
- Increased reliance on lines of credit and credit cards to stay afloat
The mortgage debt load is so high that the Bank of Canada has called it a systemic financial vulnerability.
Mortgage Debt In Canada Is At Its Highest Level Ever
Here’s what the data tells us:
- More than 80 percent of household debt in Canada is housing-related
- Mortgage balances hit record levels in 2024 and continued rising in 2025
- Home equity line of credit (HELOC) borrowing is also surging
For comparison:
- In the United States, household debt is more diversified (student loans, auto, credit)
- In Canada, homeowners carry concentrated risk tied to real estate
Canada has built a housing market where debt is a requirement to participate.
Why Canadians Are Feeling The Pain Now
The mortgage crisis didn’t happen overnight. Three key things caused it:
1. Record-low interest rates created unrealistic borrowing power during 2020-2022
Buyers bought bigger, more expensive homes than they otherwise would have because rates were below 2 percent.
2. Renewals are now happening at higher rates
Mortgage renewals are hitting rates that are 2 to 3 times higher than what buyers originally locked in.
Payment shock is real:
- A household with a $600,000 mortgage at 1.79 percent in 2021
- Could now renew at 5.24 percent
- Monthly payments increase by $1,200 to $1,500
3. Variable-rate mortgages absorbed the hit first
Borrowers with variable-rate mortgages watched their payments balloon. Many have been pushed into negative amortization, meaning payments do not even cover interest.
The New Phenomenon: Mortgages That Will Never Be Paid Off
Major Canadian banks have quietly allowed amortizations to extend past 35, 40, and even 50 years on some variable mortgages to prevent monthly payments from jumping.
Translation:
The mortgage is not getting smaller. Homeowners are paying interest only.
Banks are now slowly “resetting” these amortizations back to normal when mortgages renew, forcing payments even higher.
How This Impacts The Housing Market
High mortgage debt affects more than the homeowners carrying it. It impacts:
- Affordability
- Inventory
- Home prices
Less affordability = fewer buyers enter the market
High debt loads = fewer sellers are willing to list
Reduced supply + growing population = upward price pressure
It traps the system.
What If The Economy Slows Down?
The Bank of Canada has repeatedly warned that Canadians are more financially vulnerable than Americans because:
- Higher homeownership is tied to high debt
- Fewer Canadians have fixed 30-year mortgages
- Many have loans renewing every 2 to 5 years
A slowdown in employment could trigger:
- More forced sales
- Higher delinquencies
- More pressure on bankruptcy courts
Even without an economic downturn, high debt alone is crushing Canadians.
What Homeowners Can Do Right Now To Reduce Mortgage Pressure
1. Consider refinancing into a fixed 3 or 5 year term
Goal: stability and predictable payments.
2. Ask your lender if you’re eligible to extend your amortization temporarily
This reduces monthly payments, especially for renewals.
3. Switch lenders if your lender is not competitive
Most homeowners don’t realize switching could save thousands.
4. Make one lump-sum payment per year if possible
Even a $3,000 lump-sum payment can reduce interest significantly.
Example:
- A $600,000 mortgage
- Lump-sum payment of $3,000
- Saves over $7,800 in interest over time
What If You’re Buying Your First Home?
Buyers should focus on:
- Budgeting based on monthly payments, not purchase price
- Understanding how much payments rise at renewal
- Avoiding maxing out pre-approvals
Example:
If the bank pre-approves you for $800,000…
Strong financial advisors recommend you buy around $650,000 to $700,000 instead.
Protection > ego.
Final Takeaway
Mortgage debt is now the single biggest financial burden Canadians carry.
- 80 percent of household debt is tied to housing.
- Renewals are pushing payments thousands of dollars higher.
- Amortizations are stretching beyond 40 years.
- Many Canadians are paying interest only.
While rate cuts may offer relief, the core issue remains:
Canadians are over-leveraged because housing is overvalued.
The best financial decisions this year will be the ones that prioritize cash flow, not FOMO.
Canada Housing Market 
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