Canadian Consumer Debt Hits $2.6 Trillion as Mortgage Balances Climb — But Regional Stress Signals Emerge

Date: 26 November 2025

Canada’s total consumer debt has reached an estimated $2.6 trillion, driven largely by expanding mortgage balances. While the national delinquency rate remains low, several provinces — notably Alberta and Ontario — are showing an uptick in late-stage mortgage delinquencies, signalling early pockets of financial stress beneath the national averages.

1. Consumer Debt Surges to $2.6 Trillion — Mortgages Are the Engine

Canadians are carrying more debt than ever, according to a new report highlighting total consumer debt reaching approximately $2.6 trillion.
A large share of this increase continues to come from mortgage balances, fuelled by:

• Higher home values in major metros
• Renewals at higher interest rates
• Borrowers extending amortization to maintain affordability
• New buyers entering the market as fixed rates softened this fall

Even though the Bank of Canada has paused rate moves for several months, borrowers renewing today are still transitioning away from 1–2% pandemic-era mortgages. That shift alone can inflate balances because some homeowners capitalize unpaid interest or move to longer amortizations.

Real-life example: A family renewing a $600,000 mortgage from 2020 may now face payments $450–800 higher per month, depending on term and rate type. Some mitigate this by stretching from a 25-year amortization to 30 or 35 years, increasing the outstanding balance.

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2. National Delinquencies Are Low — But That’s Not the Whole Story

The encouraging headline:

• Canada’s national mortgage delinquency rate dropped in Q2 2025.

This signals that, broadly, most borrowers are still meeting payments despite higher rates and inflation pressures.

However, digging deeper reveals a more complicated story:

• Late-stage delinquencies (typically 90+ days past due) are rising in provinces such as Alberta and Ontario.
• These borrowers often face a combination of higher debt loads, income disruptions, or renewal shocks that their budgets cannot absorb.

Late-stage delinquencies are particularly important because they serve as a leading indicator of potential forced sales, refinancing difficulty, or eventual defaults.

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3. Why Alberta and Ontario Are Feeling the Pressure

• Alberta: Energy-linked cycles and income volatility

Alberta historically sees bigger swings in employment and income when the energy sector cools. Even though oil prices have been relatively supportive, pockets of the labour market remain unstable.

Homeowners renewing in these pockets are more sensitive to even small payment jumps.

• Ontario: Higher home prices → larger loans → higher renewal shocks

Ontario continues to hold some of the highest mortgage balances in the country.

For homeowners who bought or refinanced during 2020–2021:

• A $900,000 mortgage at 1.69% is now renewing closer to 4.6–5.2%.
• Even with amortization extensions, the monthly jump is substantial.

It only takes one income disruption — a job change, reduced hours, or unexpected expenses — to push budgets into red-zone territory.

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4. Why Headline Stability Can Mask Local Stress

National numbers smooth out regional differences. The fact that Canada’s overall delinquency rate is low doesn’t mean borrowers are uniformly safe.

Key insight:
The mortgage market is transitioning from uniform stress (2022–2023) to regional and demographic stress (2025–2026).

Who remains most vulnerable?

• Variable-rate borrowers who absorbed significant payment hikes
• Households with high total debt-to-income
• Owners who bought in 2021 peak pricing
• Households with constrained income growth

In several regions, homeowners are turning to HELOC increases, private refinancing, or extended amortization to stabilize cash flow.

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5. What Borrowers Should Watch Heading Into 2026

• Renewal Shock Still Isn’t Over

Even though fixed rates have eased slightly this fall, many homeowners still haven’t faced their renewals yet. The big wave continues into mid-2026.

• Variable-rate borrowers facing accumulated strain

Even with stable policy rates, variable-rate borrowers have already endured significant payment increases over the last two years.

• Income growth isn’t keeping up

Wage inflation has stabilized, but household expenses — especially rent, groceries, and services — remain elevated.

• Regional imbalances matter

What feels manageable in BC or PEI may be much tougher in Alberta or Ontario depending on job markets and home-price levels.

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6. Outlook: A Market That Looks Fine From 10,000 Feet — But Not Up Close

From a national lens, Canada’s mortgage market remains stable:

• Low delinquency
• Strong housing-market demand
• Moderating rates

But on the ground, the picture is more nuanced:

• Debt is rising
• Renewal pressures remain
• Stress pockets are appearing

Industry analysts say this divergence will likely continue into 2026. The good news is that early-stage delinquencies are still low — meaning most borrowers are keeping up. The question is how rising late-stage delinquencies evolve over the next two quarters.

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