Canadian Mortgage Delinquencies Dip for the First Time in 3 Years

Canada’s mortgage market has delivered its first clear sign of easing stress in several years: national mortgage delinquencies fell to 0.22% in Q2 2025, down from 0.23% in Q1, according to CMHC data reported by CityNews. It’s a small numerical drop, but an important one — marking the first national decline in delinquencies in three years, and signaling that household pressure is beginning to stabilize after years of rising interest rates and inflation.

Key Highlights

• National delinquency rate dips to 0.22%

CMHC reports that Canada’s mortgage delinquency rate fell for the first time since before the rate-hiking cycle began.

• The movement from 0.23% → 0.22% may seem small, but historically, any downturn in arrears after a prolonged uptrend is considered a stabilizing marker.
• Analysts suggest the dip may reflect easing mortgage payment shocks as interest rates gradually moderate.

• Labour market strength helps lift repayment performance

A key driver behind the improvement is the relatively strong employment environment in several provinces.

• Areas with diversified economies and rising median incomes are showing healthier repayment behaviour.
• This aligns with CMHC’s long-standing observation: as long as most households remain employed, mortgage stress remains contained.

• But Ontario and BC still show elevated delinquency pockets

According to CityNews Ottawa and Halifax, the national improvement masks regional hotspots of distress.

• Parts of Ontario — particularly higher-priced suburbs — continue to show payment struggles among borrowers hit hardest by variable-rate resets.
• In British Columbia, communities outside core Vancouver markets are still dealing with affordability challenges, higher debt loads and sensitivity to employment fluctuations.

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What’s Behind the Shift?

• Interest-rate relief is finally filtering through

The Bank of Canada’s recent rate reductions — bringing the overnight rate to 2.25% — have begun to reduce pressure on variable-rate borrowers.

• Renewal shocks have softened compared to the brutal adjustments seen in 2023–2024.
• Some lenders are offering more competitive short-term fixed products, giving homeowners an easier path through the transition period.

• Refinancing and amortization strategies are helping

Borrowers are increasingly using:

• Amortization extensions, where permitted
• Switch-overs from variable to fixed
• Debt-consolidation refinancing to roll high-interest loans into mortgage products

These tools lower monthly payments and reduce the likelihood of missed mortgage instalments.

• Household income growth is easing pressure

Rising wages in several provinces are providing a buffer against high mortgage payments. This has helped offset stubborn inflation and high shelter costs.

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Where Stress Remains

• Payment shock still significant in Ontario

Borrowers who purchased at peak prices or took out high-ratio or investor mortgages continue to face heavy pressure, even with moderate rate relief. This is contributing to the region’s higher delinquency readings.

• BC markets vulnerable to income volatility

Interior and suburban BC markets are showing slow improvement, but many households remain stretched due to large mortgage sizes relative to income.

• Alternative-lender borrowers most exposed

Mortgages held with MICs, private lenders or non-prime lenders remain the most at-risk segment. Their payment structures often adjust more sharply, contributing to persistent delinquency rates.

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What This Means for Homebuyers & Renewing Borrowers

• Renewals are getting less painful

While renewals are still expensive compared to pre-2022 levels, borrowers this year are seeing smaller payment jumps, thanks to improving rate conditions and better lender competition.

• FTBs benefit from predictability

The decline in delinquencies suggests market stabilization, which helps first-time buyers plan more confidently. Affordability is still tight — but financial stress indicators are improving.

• Regional research matters more than ever

With national numbers improving but local conditions diverging, buyers should evaluate employment strength, local supply, and demographic trends specific to their market.