Rising Originations Mask Building Stress in Canada’s Mortgage System

Toronto | 22 November 2025

Canada’s mortgage market is showing a surge in activity again, with borrowers returning to banks and lenders in large numbers. But beneath the rising originations and refinancing momentum, new data suggests the system is carrying more pressure than it appears on the surface. A fresh report from The Deep Dive highlights that while mortgage volumes are rising, household finances and regional delinquency trends point to growing fragility—especially heading into a heavy renewal cycle.

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A Strong Start to 2025 — But With Caveats

The headline figure is striking. Canadian lenders issued roughly CAD 291 billion in new mortgages in the first half of 2025, compared with CAD 189 billion during the same period last year. After several years of caution driven by higher rates and economic uncertainty, borrowers are clearly coming back.

Much of this volume isn’t just new purchases—it’s movement. Refinances, switches and restructuring became major contributors to the spike. Uninsured mortgage switches jumped nearly 67%, reaching close to CAD 19 billion. That shift suggests many Canadians are actively searching for better deals or attempting to manage higher payment obligations ahead of renewals.

At first glance, these numbers appear to signal renewed confidence. But the composition of borrowing, combined with deeper structural indicators, signals a more cautious outlook.

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Borrowers Prefer Mid-Term Stability Over Long-Term Security

One of the most telling behavioural changes is the sharp rise in 3- to 5-year fixed-term mortgages, which now account for roughly 43% of all new originations. Canadians want predictability, but are hesitant to lock into longer terms with rates still elevated.

Terms longer than five years remain uncommon at around 17% of originations. Borrowers are effectively placing a bet that interest rates will decline over the next few years—making a shorter fixed term feel safer than locking in a rate for seven or ten years.

However, shorter terms also mean many borrowers will face renewal again sooner, at a time when financial pressure may still be present.

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A Heavily Indebted Household Sector

Canada’s mortgage debt load continues to grow, reaching approximately CAD 2.3 trillion by August 2025—up 4.8% year-over-year. Even more concerning is the national household debt-to-disposable-income ratio, which sits at 181.8%, one of the highest in the developed world.

High debt doesn’t always mean immediate risk, but it reduces the buffer households have against financial shocks. When combined with rising living costs, rate-sensitive loans and upcoming renewals, the margin for error becomes very thin.

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A Nationally Stable, Regionally Uneven Delinquency Picture

According to the report, national mortgage delinquency rates improved slightly to 0.22% in Q2 2025—progress after three years of steady increases. But this improvement hides an important detail.

In Ontario, delinquency rates rose to 0.23%, and in Toronto, they climbed to 0.24%—one of the sharpest increases in the country. British Columbia is also showing early signs of stress.

These regions carry some of the highest mortgage balances and the largest proportion of borrowers who took short-term or variable-rate mortgages during the pandemic. Even small payment increases can push households into difficulty.

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The Looming Pressure Point: Renewals

More than 750,000 mortgages are set to renew between late 2025 and the end of 2026. Many of these were taken during the low-rate period of 2020–2021, when interest rates were at historic lows.

A homeowner who locked in a 5-year fixed at 1.79% in 2020 may now be facing renewal rates in the 4.5%–5.5% range. Even if they choose a shorter fixed term, their monthly payments will likely increase noticeably.

The renewal cycle is widely seen as the biggest potential stress test for the Canadian mortgage system.

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What Borrowers Should Take From the Report

The Deep Dive’s analysis reinforces three key steps for anyone with upcoming renewals:

1. Check your renewal date early.
Many borrowers underestimate how quickly payment changes can arrive. Planning six to 12 months ahead provides options.

2. Stress-test your budget.
Use rates 1–2% higher than your expected renewal rate. This helps anticipate payment shock and prevents financial strain.

3. Watch regional conditions.
If you’re in Ontario or B.C., the elevated delinquency trend means lenders may tighten conditions faster.

Canada’s mortgage market is busy again, but activity alone doesn’t equal stability. Rising originations coexist with high debt, regional stress and one of the most consequential renewal cycles in recent memory. Borrowers should take advantage of the current window to assess risk, plan renewals and prepare their household budget for the next phase of the market.