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- calendar_today October 20, 2026
Mortgage Arrears Doubling in Canada, Outpacing G7 Peers
The share of Canadian homeowners falling seriously behind on mortgage payments has doubled since its lowest point in 2022, marking the steepest rise among G7 nations, according to findings from Benchmark Canada, a project by the Macdonald-Laurier Institute. The rise in mortgage arrears signals increasing financial pressure on Canadian households and raises concerns for the country's housing market.
Comparative Mortgage Arrears Across the G7
Despite the recent increase, Canada still maintains the second-lowest mortgage arrears rate in the G7, behind only Japan. Benchmark Canada reported that 0.29 percent of Canadian mortgages were in arrears as of September, up from 0.14 percent in August 2022. This marks a significant surge in mortgage delinquencies within a short period. In comparison, the United States stands at 1.43 percent, the United Kingdom at 0.89 percent, and Italy leads with the highest rate of 2.10 percent. Japan remains lower than Canada at 0.20 percent.
Factors Fueling Mortgage Delinquencies and Renewals
Ron Butler, a mortgage broker at Butler Mortgage, attributes much of the financial strain to condo investors facing higher financing costs, declining rents, and more vacancies. Some investors are unable to sell their units at a price that covers the outstanding mortgage debt, forcing them to shoulder continued losses. Butler warns that many homeowners are resorting to personal lines of credit or credit cards to manage everyday expenses in order to keep up with mortgage payments.
Benjamin Tal, deputy chief economist at CIBC, explains that the spike in arrears coincides with the period when many Canadians are renewing mortgages first taken out at low rates in 2021. As rates climb, mortgage renewal becomes more challenging, but Tal says lenders have responded proactively by extending repayment timelines and intervening with borrowers before they fall further behind. He notes that delinquencies in the 30- to 60-day range have increased, while longer-term arrears have remained flat, partly due to these interventions.
Regional Disparities and Market Vulnerabilities
Ontario, by virtue of its population, exhibits the highest number of mortgage delinquencies in Canada, with a rate of 0.34 percent as of July—accounting for more than half of all delinquent mortgages in the country. Saskatchewan holds the highest delinquency rate at 0.46 percent, followed by Manitoba and Ontario at 0.34 percent each, according to the Canadian Bankers Association. Despite these figures, Canada’s overall arrears rate remains below its historical average of approximately 0.40 percent, as reported by Benchmark Canada.
Outlook for Homeowners and the Housing Market
Butler cautions that if the national mortgage delinquency rate rises above 0.40 to 0.50 percent, it would raise significant red flags for the housing market. He notes that low arrears do not necessarily mean homeowners are financially comfortable, as many are leveraging alternative financing options outside of banks—such as private lenders, which Benchmark Canada does not include in its data. Butler and Tal both highlight the importance of the job market: recent data from Statistics Canada shows a loss of 68,000 jobs in September, making employment status a key risk factor for further increases in mortgage defaults.
Tal believes the worst effects of mortgage renewal shocks may have passed for many, suggesting that while arrears are likely to rise further, Canada's strengthened banking system and lender intervention mean the situation remains manageable for now. The prolonged downturn in the condominium investment sector could take two years to resolve, but primary residences are less at risk, according to Tal.
Conclusion
While mortgage arrears in Canada have risen sharply from their 2022 low, the nation's lending and regulatory systems have prevented a more severe crisis. Experts urge homeowners to remain cautious, especially as economic factors such as job losses and interest rate increases continue to influence the market.
Source: nationalpost.com.
