Toronto | 25 November 2025 —

Canada’s latest banking data shows early signs of financial strain among homeowners. New numbers from the Canadian Bankers Association (CBA) reveal a rise in mortgage arrears alongside the first meaningful decline in total mortgage volumes in years.

Below is a clear breakdown of what the data shows, why it matters, and what it could mean for borrowers heading into 2026.

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What the New CBA Data Shows

• Mortgage arrears have risen to the highest level since 2020

The 90-day+ arrears rate at major Canadian banks hit 0.24%, the highest since the pandemic recession.
This means more homeowners are falling three or more months behind on payments.

Why this matters:
Mortgage arrears tend to rise when households run out of cash buffers. Even small rate increases—or income shocks—can push stretched borrowers into default territory.

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• Number of active mortgages is shrinking

Banks held 4.94 million residential mortgages as of August — a 1.7% year-over-year decline, marking the first sustained contraction since the CBA began tracking this metric.

This signals two things:

1. Affordability constraints: High home prices and still-elevated interest rates are keeping buyers out of the market.
2. Tighter lending standards: Banks are being more selective with approvals due to rising borrower vulnerability.

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Why This Trend Matters (In Simple Terms)

• Borrowers are under pressure

Mortgage payments remain historically high compared to incomes. Households renewing in 2025–26—especially those coming off sub-2% pandemic-era rates—are facing large payment jumps.

• Lenders could tighten further

Banks may increase scrutiny on income stability, debt ratios, and credit scores. This could make it harder for borderline applicants to qualify or refinance.

• Market stability depends on arrears

Arrears remaining low is key to avoiding a broader housing correction. A rising trend may trigger caution among policymakers, lenders, and regulators.

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Context: Why Is This Happening Now?

• Renewals are ramping up

A wave of 2020–2022 borrowers are hitting renewal windows — many facing increases of $400–$1,200 per month.

• Non-mortgage debt stress is rising

Credit-card and auto-loan delinquencies have been climbing across Canada since mid-2024, often preceding mortgage distress.

• Income buffers are thin

Surveys show nearly half of mortgage holders would struggle financially within six months if their main income stopped.

• Home sales have cooled

Low sales volume reduces refinancing opportunities that would otherwise help borrowers reset their debt.

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What Borrowers Should Do Right Now

• Check renewal options early

Homeowners renewing within 12 months should request rate quotes now and compare fixed vs variable trade-offs.

• Consider blended or extended amortizations

These can soften payment shocks—though long-term interest costs increase.

• Review emergency savings

A cushion of 3–6 months of expenses is becoming essential as arrears trend upward.

• Stay ahead of lender communication

If payment difficulty is expected, contacting the lender early can open up options like temporary deferrals or restructuring.

Canada’s mortgage market is showing early signs of stress. Rising arrears and shrinking mortgage volumes are clear indicators that both borrowers and lenders are navigating a more cautious environment. For anyone renewing or purchasing in 2025–26, now is the time to understand your options — and prepare.