Opinion: Canada’s mortgage delinquencies creeping up

Countries don’t typically get report cards, but there are hard facts that can be collated, assessed and compared. Enter Benchmark Canada, a new project from the Macdonald-Laurier Institute that brings together more than 40 different metrics that measure this nation’s performance. This fall, the National Post is examining many of those findings. 

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Despite rising uncertainty and economic disruptions, Canadian households have shown resilience in meeting their financial obligations. Mortgage delinquencies in Canada are the second-lowest among G7 countries, with 0.28 per cent of mortgages in arrears for over 90 days.

Behind the lower delinquency rates, though, is an uncomfortable trend: Canada’s delinquency rate has doubled in just four years. A financially conservative lending culture, proactive governance by the Office of the Superintendent of Financial Institutions (OSFI), and responsible borrowers have kept the delinquency rate much lower than in the markets to the south, where the national rate averaged across the U.S. reached 1.43 per cent, five times higher than Canada’s.

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Canadian households’ financial resilience is reassuring. However, it should not lead to regulatory complacency. The Canadian economy continues to face headwinds from uncertainty in trade with the U.S., disruptions to energy supplies and global supply chains, and an out-of-balance flow of working-age immigrants. As Canada tries to reimagine its competitive advantage in trade and commerce, stable housing markets give governments and businesses room to chart a strategy for global competition.

With almost five million outstanding residential mortgages in Canada in June 2026, only 14,021 mortgages were past due for three months or more. This number should be seen in the context of huge swings in mortgage rates that directly affected the cash flow of millions of households, whose mortgage payments jumped with the steep, sustained rise in rates starting in November 2022.

Many market watchers expressed deep concern earlier when a huge wave of pandemic-era low-rate mortgages came up for renewal at much higher rates during 2025 and 2026. Almost 1.8 million mortgages were up for renewal, and many more in 2027. Still, mortgage delinquencies have remained remarkably low compared with the G7 economies, despite rates doubling over the past four years.

Disciplined Canadian borrowers can take some credit for the stability of the mortgage debt market. Yet, the credit must go to the OSFI, the federal regulator, which instituted stress tests, first on insured mortgages and subsequently expanded to uninsured mortgages, that required borrowers to qualify at a rate almost two per cent higher than the negotiated rate with the lender, to ensure that the borrower can sustain sudden rate hikes.

At the time OSFI introduced stress tests, first in 2016 and expanding them in 2018, many questioned the utility of these measures, especially when prairie housing markets were struggling with sales and prices. Raising the bar meant fewer households would qualify for mortgages, or they would qualify for lower amounts than desired. Almost 10 years later, and since the unpredictable swings in financial markets brought about by black swan events like tariffs, wars and a global pandemic, Canadian regulators’ foresight should be a source of comfort.

The resilience of Canadian borrowers does not change the fact that Canadian households are the most burdened by debt among their G7 peers, with a debt-to-income ratio of 176.4 per cent. Yet, this high indebtedness has not led to a systemic debt market crisis. A recent paper by the C.D. Howe Institute cites two reasons for what has buffered the impact of high household debt. First, the financial strain is concentrated in certain demographics, mostly younger workers, and in expensive housing markets. Second, the debt-to-service ratio, a proxy for the household income devoted to servicing debt, has improved since peaking in 2023

The authors of the C.D. Howe report rightly warn that comforting national averages of stable household debt markets may hide vulnerable segments, including younger workers and highly leveraged Canadians in expensive housing markets in Ontario and British Columbia.

Spatial disparities in mortgage delinquencies are vast, with prairie markets in Saskatchewan and Manitoba showing significantly higher rates than in Quebec, according to data from the Canadian Bankers Association. Saskatchewan’s delinquency rate of 0.46 per cent is more than twice Quebec’s 0.18 per cent.

The devil is in the details in mortgage delinquencies, and a more nuanced picture emerges with fine-grained data. Despite the higher rates, Saskatchewan accounts for a much smaller share of delinquencies, given its smaller share of the national population. The real exposure lies in Ontario, with its large population and therefore the largest number of underwater mortgages in absolute terms.

Region-wide data reported by the Canada Mortgage and Housing Corporation, derived from Equifax, show that mortgage delinquency rates have mostly declined from their pre-pandemic peaks in the Maritimes and in Saskatoon. However, the real challenge is urban Ontario, where delinquency rates have recently been rising and are higher than pandemic-era levels. Another disturbing trend in Ontario markets is that while delinquency rates in large urban centres were lower than the Canadian average in the past, the trend has recently reversed in some markets, such as Barrie and Toronto Census Metropolitan Areas.

Timely access to relevant, reliable data clarifies the nuanced picture of mortgage delinquencies across the G7 economies and Canada’s diverse landscape. Businesses and governments rely on ready access to data so policies and strategies are informed by recent, relevant information.

Until recently, benchmarked data on Canada’s economic trends ranked against comparable economies and spatial disparities in economic and financial outcomes were not readily available. However, a recent benchmarking data initiative in Canada has made data readily available for informed decision-making.

Benchmark Canada makes relevant data available to stakeholders, offering comparative statistics across five economic pillars and evaluating Canada’s ability to finance, build, govern, secure, and elevate its citizens’ living standards. The platform offers benchmarked data and insights on 44 distinct metrics, including mortgage delinquencies, which contributed to this commentary.

Devising policy and strategy with relevant, real-time data is essential to steer Canada’s economy out of troubled waters. It is comforting to know that household debt in Canada, despite its elevated levels, is being managed by households. Keeping a close eye on how mortgage delinquencies evolve in the future is necessary to keep the economy secure.

Murtaza Haider is a professor and the Radhe Krishna Gupta Executive Chair of Cities and Communities at the University of Alberta. Stephen Moranis is a real estate industry veteran.

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