Residential Mortgage Industry Report Spring 2026 Edition

About the Residential Mortgage Industry Report

The Residential Mortgage Industry Report explores key issues in housing finance. Its purpose is to support stable and affordable housing markets. Focused on topics that impact policy and business decisions, the report provides clear insights and information to guide smarter, risk-based choices.

Mortgage risk rising

The mortgage system is showing early but contained signs of strain, with pressures emerging across borrowers, lenders and structural indicators. While overall risks remain manageable, several trends point to rising vulnerability that warrant close monitoring:

• Mortgage delinquencies are rising, led by Ontario, but remain low by historical standards.
• High-risk borrowers are carrying more debt, increasing sensitivity to income shocks.
• Non-mortgage delinquencies are also increasing, though the pace has slowed.
• Mortgage investment entities (MIEs) show the fastest rising 90+ days delinquency rates, with risk concentrated in smaller lenders.
• Structural risks are easing, as renewal pressures decline and the share of uninsured mortgages with long amortizations shows signs of leveling off following a period of increase.

Borrower-level risks

Mortgage delinquencies are increasing, particularly in Ontario

The national mortgage 90+ days delinquency rate increased to 0.24% in Q4 2025 from 0.21% a year earlier.¹ This rate continued its upward trend from the pandemic lows. Despite this increase, 90+ days delinquency levels remain low. The 0.24% rate is the highest since Q1 2021 (which was the lowest rate on record).

The increase is driven by continued challenges in certain regions:

• 45% increase in Toronto year-over-year from 0.20% to 0.29%
• over 45% growth in Barrie and Windsor
• 35% increase across Ontario from 0.20% to 0.27%
• 31% increase in Vancouver CMA
• 32% increase in Abbotsford-Mission CMA
• 24% increase across BC from 0.17% to 0.21%
• more than 20% drop year-over-year in St. John’s, Saskatoon and Quebec City

Source: Equifax Canada

Debt growing among highest-risk borrowers

Equifax classifies borrowers based on their likelihood to make payments and their likelihood of declaring bankruptcy. Using these indicators, we define high-risk consumers as those who are at high risk of both missing a payment and declaring bankruptcy.

The debt-per-high-risk-consumer experienced only minor fluctuations between 2014 and 2022. But in Q4 2025, the debt-per-high-risk-consumer was 30% higher than the long-term trend. 

Non-mortgage delinquencies rising at a slower pace

The 90+ days delinquency rate (arrears) for auto loans, credit cards and lines of credit (LOC) all increased year over year. Rising arrears in these non-mortgage products is a leading indicator of mortgage arrears. Borrowers will choose to miss payments on other products before risking losing their home.

However, the rate of increase in these arrears has slowed over the last couple of years (Figure 1). This suggests some stabilization in financial pressures facing Canadian households. The rate of growth in the 90+ days delinquency rate was:

• 15% (compared to 19% a year ago and 57% 2 years ago) for LOCs
• 5% (compared to 10% a year ago and 15% 2 years ago) for credit cards 
• 4% (compared to 9% a year ago and 3% 2 years ago) for auto loans

Unlike mortgage arrears, the rates for these credit products are all above rates seen since at least 2014.

The data allow us to look at these patterns across mortgage and non-mortgage holders. Although an imperfect proxy, non-mortgage holders might generally represent household who have less income and have not yet taken on a mortgage. Consistent with this proxy, Figure 2 shows that 90+ days delinquency rates are higher on average for non-mortgage holders.

Increasing delinquencies in non-mortgage loans among mortgage holders suggest increasing risks in the residential mortgage sector. On the other hand, increasing delinquencies for non-mortgage holders could also suggest increasing challenges for lower-income households who are less likely to own a home.

The sum of the 90+ days delinquency rate for all 3 non-mortgage products has risen 23% for non-mortgage holders. For mortgage holders, this sum is unchanged between 2019 Q4 and 2025 Q4.

Year-over-year, both mortgage holders and non-mortgage holders experienced higher 90+ days delinquency rates in non-mortgage products. However, the rate of change in the 90+ days delinquency rate is higher for mortgage holders than non-mortgage holders (Figure 2). The rates of increase between Q4 2024 and Q4 2025 were as follows, respectively:

• 17% and 12% for LOCs
• 6% and 5% for credit cards
• 14% and 2% for auto loans

Lender-level risks

Mortgage investment entities’ 90+ days delinquency rate climbed faster than other lender types

The mortgage 90+ days delinquency rate at MIEs continued its increase, reaching 1.96% in Q3 2025 (Figure 3). The downward deviation in Q1 2025 reported in the last edition of this report appears to have been only a minor blip in the general upward trend. The rate is nearly triple the pandemic low of 0.69%.

Their higher exposure to Toronto may partially explain their worsening 90+ days delinquency rate. While they have the highest rate among lender types, they only have a 1% share of outstanding mortgages.

Chartered banks 90+ days delinquency levels reached 0.24% in Q3 2025 to equal their pre-pandemic reference point.

Prior to that period, the 90+ days delinquency rate for chartered banks was within 0.1 percentage points of 0.24% since the spring of 2017.² Despite recent increases, their 90+ days delinquency rate remains historically low. Prior to 2017, the last time the rate was this low was 2007. Outside of the pandemic, we would have to go back to 1990 to find a lower rate.

Credit unions have the lowest mortgage 90+ days delinquency rate. It remains 0.1 percentage points below the pre-pandemic reference and remained there throughout 2025. Their strong underwriting practices and lower risk lending help them maintain a low 90+ days delinquency rate.

The 90+ days delinquency rate of the other non-bank lenders category (such as mortgage finance companies, trusts and insurance companies) has once again surpassed the pre-pandemic reference period. A change in lender classification led to a drop in the 90+ days delinquency rate for this category in Q1 2025. However, the upward trend is second only to MIEs.

The other lenders category includes a diverse group of lenders, ranging from those with very conservative lending practices to those with risk appetite similar to MIEs. The presence of low-risk lenders in this segment leads to the overall rate to remain in line with chartered banks’ while the high-risk lenders in this segment are seeing their 90+ days delinquency rate rise rapidly. As a result, their 90+ days delinquency rate is trending upward more quickly than it is for chartered banks or credit unions.

Allowances for expected credit losses rose rapidly

Chartered banks increased their allowances for loan losses on single-family homes by 25% in the second half of 2025 compared to the second half of 2024.³ The ratio of loan-loss allowances to mortgage value outstanding increased from 0.11% to 0.14% in the year to Q4 2025.

For condominium units, loans loss allowances increased 39% over the same period as concerns grow in that segment. This aligns with the growing risks noted in CMHC’s Condominium apartment market risks in Toronto and Vancouver, published in June 2025.

The multi-unit sector includes residential construction loans for multi-family buildings. This sector saw a 51% increase in the allowance for expected credit loss. The growth in project cancellations may explain this increase.

Structural risks

There are other parts of the lending space that give encouraging signals:

1. Renewal “cliff” worries dissipating in 2026

   Renewal pressures peaked in 2025 and remain elevated in early 2026. However, the volume of mortgages coming due declines meaningfully through 2026 and into 2027. This easing reduces concerns about a concentrated “cliff.”

   The number of borrowers who will be renewing in 2026 is 13% lower than the number of borrowers who renewed in 2025. Interest rates have trended down from around 4.8% in January 2025 to around 4.2% in January 2026.⁴

   This combination means that there are fewer people renewing, and the size of the payment shock is likely similar to those who renewed in 2025. However, the Housing Market Outlook 2026 predicts interest rates could rebound in mid-2026.

   The mortgage renewal “cliff” passed its biggest hurdle in 2025. Borrowers who renewed in 2025 have mostly been able to manage the increase in monthly payments. This was likely supported by the stress test for both insured and uninsured mortgages at regulated lenders. This test required borrowers to be able to afford a 2-percentage-point increase in their mortgage payments. However, because it takes time it takes for borrowers to show financial distress and become delinquent, this situation requires continued monitoring.

2. Amortization periods begin to shorten as debt-service ratios continue to fall

   Amortization is the time that it takes to fully repay a mortgage. While mortgages were typically paid off over 25 years, insured mortgages were allowed to be amortized over 30 years starting in 2024. There are pluses and minuses of longer amortization periods. Longer amortization can lower monthly payments but lead to higher interest costs over the life of the mortgage and a longer repayment period. For uninsured originations, the share of mortgages with an amortization period over 25 years was 62% in Q4 2025 (Figure 4), a drop from 65% in Q4 2024.

   As interest rates rose in 2022, the total debt service (TDS) rose. The TDS is a ratio capturing the share of a household’s monthly income used to cover all monthly debt payments.

   To try to offset these higher payments, borrowers extended their amortization. Combined, this meant that borrowers were paying more every month and for a longer period.

   Then, as interest rates fell, it was the share of borrowers with a high TDS ratio (those with a ratio greater than 45%) that fell immediately. After peaking at 36% in Q4 2022, it has fallen to 30% of originations in Q4 2025, still above the 21% in Q4 2020 (Figure 4).

   The drop in the share of mortgages with a high TDS ratio and/or long amortization periods means a lower overall risk for banks. This reduces the risk of real financial loss from uninsured lending. As insured loans do not represent a credit risk to the lenders, they aren’t discussed here.

Home Equity Lines of Credit proving resilient

Home Equity Lines of Credit (HELOCs) represent another loan secured by properties. The 90+ days delinquency rate for HELOCs is unchanged in Q4 2025 compared to both Q4 2024 and Q4 2023 at 0.16%.

The rate for this credit product was within 2 basis points of 0.16% since at least 2014, outside of the pandemic. This suggests strong stability in the HELOC market.⁵

Mortgage System Conditions Overview

Borrower conditions and behaviour

Borrower conditions in 2026 reflect a tension between rising financial stress and shifting incentives. These changes are driven by mortgage insurance eligibility rule changes and interest rate movements.

• Rising unemployment is increasing the risk of higher arrears.
• Debt burdens have edged up as incomes soften.
• Credit quality remains mixed as the share of low-score borrowers grow.
• Mortgage insurance eligibility rule changes pushed demand toward insured mortgages with longer amortizations.
• Borrowers’ shift toward shorter terms and more variable rates is increasing rate sensitivity.

Despite economic resilience, higher unemployment increases risk of higher arrears

Canada's economy has been affected by the global economy but has proven resilient. In March 2026, national unemployment stood at 6.7%. While this is higher than levels observed over the last couple of years, it remains relatively low from a long-term perspective (see Figure 5).⁶

Unemployment is an important metric when it comes to assessing the health of the mortgage system. When households experience job loss, many struggle to keep up with mortgage payments. Arrears then tend to rise, albeit with a lag, as shown in the data. Arrears measured by the Canadian Bankers Association tend to match the unemployment rate (outside of the spike during the pandemic).

Mortgage arrears are rising, driven by several factors:

• unemployment trends and overall economic conditions
• interest rate patterns and broader financial risk in the economy
• mortgage renewals at higher interest rates, which can trigger arrears
• higher mortgage amounts, which increase sensitivity to rate changes
• elevated debt levels in some expensive Canadian cities, where payment increases are more significant

See Mortgage renewal wave strains some regions and borrowers for more information on renewal risks.

The household debt-to-disposable-income ratio reached 173.3 in Q4 2025, up from 171.8 a year earlier. This means that, on average, households owed $1.73 in debt for every dollar of disposable income.⁷

Although the increase is modest, it represents the largest year-over-year quarterly gain since Q3 2022, following a period of gradual decline since 2023. Debt growth remained unchanged from a year ago. The rise in the ratio was driven by weaking labour conditions, notably softening wage growth.

Credit quality shows mixed trends

More mortgage holders improved their credit scores than experienced a decline in 2025.

However, the share of outstanding mortgage loan amount held by consumers with a low credit score (below 600) increased over the past 3 years. It rose from 1.1% in Q4 2022 to 1.7% in Q4 2025.⁸

Looking at flows, the share of originated mortgage loan amounts to consumers with a low credit score decreased. It fell from 0.6% to 0.4% over the same period.

The picture that emerges from this data is a stock versus flow dynamic. While recent originations show stronger credit quality, the existing mortgage stock still contains earlier cohorts with weaker scores. In addition, a borrower may obtain their mortgage when their credit score is high and later experience a decline in that score. The share of outstanding mortgage reflects the credit score in that quarter, not the credit score at origination.

These trends reflect in part tightening credit standards from stronger Office of the Superintendent of Financial Institutions (OSFI) regulations around loan-to-income levels announced in April 2024.⁹

Mortgage insurance eligibility rule changes resulted in more insured mortgages

Mortgage insurance eligibility rule changes led to an increase in access to insured mortgages by relaxing limits on amortization periods and allowing higher valued mortgages. Consequently, the insured-mortgage system saw the following growth:

• In Q3 and Q4 2025, the total outstanding value of insured mortgages registered year-over-year increases. Only 6 other quarters since 2017 have witnessed growth.¹⁰
• In Q4 2025, 54% of mortgages extended (originated and renewed) to first-time home buyers by chartered banks were insured. This is up from the usual mid-40% share prior to the eligibility changes.¹¹
• In Q4 2025, two-thirds of insured originated mortgages by chartered banks had amortization periods longer than 25 years. This is more than double the share of insured originations observed a year earlier.

These mortgage insurance eligibility rule changes, and macroeconomic changes, enabled more borrowers to get access to insured loans.

These mortgage insurance eligibility rule changes shifted first-time homebuyers from conventional mortgages to insured mortgages. They didn’t increase aggregate risk. Instead, they shifted borrowers into products with lower downpayments and longer amortizations periods. This altered the composition of risk within the system.

Higher rates and macro uncertainty led to shifts in mortgage maturity choices

Borrowers’ shift toward shorter terms and variable rates has increased the system’s exposure to future rate movements. Households have explored alternative mortgage terms to manage borrowing cost that remain above the average since the financial crisis in 2008.

Many mortgage holders are reluctant to commit to a 5-year fixed term. This is partly explained by heightened uncertainly amid ongoing macroeconomic volatility. As a result, fixed-rate mortgages with terms of 3 to less than 5 years remained popular. They accounted for 35% of extended mortgages at chartered banks in February 2026.

Another contributing factor is that, since Q4 2025, variable mortgage rates at chartered banks fell below fixed-rate mortgages rates. This is the first time this has occurred since 2022.¹² Lower variable rates have encouraged a shift away from fixed-rate products. In February 2026, variable rates were the most popular option among extended mortgages, at 42% (see Figure 6).

Only 11% of mortgages extended at chartered banks had the traditional fixed-rate mortgage with a 5-year term in February 2026. This term is included in the category of 5 years or longer. 

Taken together, the following factors create a system that is more sensitive to rate changes:

• labour-market softening
• mortgage insurance eligibility rule-driven shifts toward insured products
• shorter mortgage terms create a system that is more sensitive to rate changes

However, the system is supported by stronger underwriting for new originations.

Borrower behaviour is only half the story. Lender responses determine how these pressures propagate through the system.

Lender types and market dynamics

Recent changes in lender activities and behaviour show key dynamics across lender types including:

• banks having more insured lending and renewals than 2024, and insurance helps manage credit risk
• credit unions expanding faster than chartered banks, driven by strong growth in switches and purchases
• other lenders subject to financial regulations shifting toward insured products while experiencing weaker renewal and refinance activity
• mortgage investment entities increasing lending despite rising delinquencies, consistent with their role in highest-risk lending (not regulated as financial institutions)

Overall mortgage debt passed $2.4 trillion, led by growth for the Big 6 Banks

Residential mortgage debt reached $2.4 trillion in January 2026, up 4.8% from a year earlier. This growth was faster than in 2024 and in line with the 2025 average, though still below the historical average.

The Big 6 banks saw the biggest change in their share of outstanding mortgages when compared to other lenders (Figure 8a). Their share increased 0.6 percentage point between Q3 2024 and Q3 2025.

In contrast, and despite originating more mortgages as discussed below, the Big 6 banks saw the largest year-over-year decrease in their share of originated mortgages (Figure 8b). Their share fell by 6.9 percentage points over the same period. This reflects a base year effect as the Big 6 banks had higher originations in Q3 2024.

The difference between the share of originations and share of outstanding mortgages can be explained by a few factors:

• Different term lengths: MIEs account for about 7% of originations but only about 1% of outstanding mortgages. Their mortgages remain on the books for a brief period, typically less than 1 year, compared with other lender types.
• Bulk mortgage purchases: Differences across other lender types may also reflect portfolio transactions. When a lender buys a pool of mortgages from another, it isn’t counted as an origination. It increases the buyer’s outstanding mortgages and reduces the seller’s.

Each of the major providers of mortgage financing in Canada accounts for different shares of originations:

• 54.8% are chartered banks
• 16.7% are credit unions
• 4.5%. are mortgage investment entities (MIE)

1. Chartered banks

Insured lending drove increase in originations in second half of 2025

Mortgage originations are a key measure of activity in the lending sector. They capture:

• new mortgages being taken out
• mortgages being refinanced 
• borrowers switching lenders at renewal

During the pandemic, most mortgage activity related to originations.

Today, activity is driven by renewals as pandemic-era mortgages approach the end of their traditional 5-year term. These mortgages aren’t typically government insured, meaning that the homeowners have paid significant downpayments.

Total mortgage originations were up 9% in the second half of 2025 compared to the previous year. Insured originations increased by 35%, while uninsured originations rose by 4%. This reflects mortgage insurance eligibility rule changes that allowed more homeowners to obtain insured mortgages.

Renewal activity increased

Most activity among the mortgage lenders is currently the renewal of past mortgages. Traditionally, Canadian mortgages were issued for 5 years for both variable-rate and fixed-rate mortgages. However, as noted in recent editions of this report, the trend has been toward shorter mortgage terms in recent years.

The number of mortgage renewals will fall in 2026 compared to 2025, meaning that the dollar value of renewals in 2025 represents a peak.

Mortgages for purchase of property were more likely to be insured mortgages in 2025 than 2024 

Mortgages for the purchase of property rose 3% in the second half of 2025 compared to 2024. Uninsured mortgages for the purchase of property fell 7% to $67 billion in the same period. Insured mortgages increased by 37% to $30 billion over the same period.

Mortgage refinancing increased despite falling approval rates

Refinancing a mortgage means replacing an existing mortgage with a new one, often of a different interest rate, loan amount or term. According to CMHC’s January 2025 Mortgage Consumer Survey, the most common reason for refinancing continues to be funding renovations. However, financial pressures are increasingly important drivers, with:

• 28% for funding renovations
• 22% for debt consolidation
• 14% for lowering mortgage payments

The approval rate for same-lender refinance applications fell from a peak of 98% in Q2 2021 to 79% in Q4 2025.¹³ The rate of 79% is within the pre-pandemic norm. It is an increase after a 70% approval rate for refinances in Q3 2025 which was the lowest since the data began in 2016.

Declining approval rates suggest that banks are tightening credit standards in response to more stringent loan-to-income OSFI regulations. Lower approval rates suggest it’s harder for households to restructure their debts to take advantage of any home equity they may have.

Removal of stress test still impacting switching

In November 2024, OSFI made a change to its mortgage underwriting rules. Borrowers no longer need to requalify for the stress test when switching an uninsured mortgage between federally regulated lenders at renewal.¹⁴ The move was designed to allow increased competition among lenders. As a result, uninsured mortgage switches (other renewals and refinances) increased 34% between the second half of 2024 and the second half of 2025.

Insured mortgage switches increased from $3.4 billion to $4.0 billion (a 16% increase) between Q4 2024 and Q4 2025. The total for mortgage switches increased 28% ($21 billion to $27 billion).

2. Credit unions

Credit union lending up significantly

Credit union lending expanded over the past 4 quarters. The total value of originations was 28% higher in Q3 2025 reaching $23.6 billion, compared to $18.4 billion in Q3 2024. This offsets and reverses a trend of 2 straight years with minor declines. Q3 2024 saw a 4% decline and Q3 2023 saw a 6% decline.

Uninsured switches also grew substantially, with a 104% year-over-year increase in uninsured switches ($962 million to $1.954 billion). A major contributor to this growth was insured switches, which were up 117% year-over-year. Since Q3 2023, there has been a 9-fold increase in insured switches. As more mortgages come up for renewal, it isn’t surprising that the value of switches would increase accordingly.

Renewals up 12% year-over-year

The renewal wave impacted credit unions as the value of renewals increased 12% between Q3 2024 and Q3 2025. The increase came from both uninsured and insured lending as they were up 13% and 10%, respectively. The number of renewals is expected to fall in 2026 compared to 2025.

High total debt service ratio mortgages remain rare at credit unions

Credit unions didn’t see a noticeable increase in the share of high total debt service (TDS) ratio mortgages above 45% as interest rates rose. When data first became available in 2020, the share of originations with a high TDS ratio was 11%. As mortgage payments increased because of interest rate hikes, the share reached 12% in 2022. It remained at 12% until dropping back to 11% for the first time in Q2 2025.¹⁵

3. Other lenders subject to financial regulation

“Other lenders” includes a mix of lenders who don’t fit into the other categories. They are grouped as other non-bank lenders by the Survey of Non-Bank Mortgage Lenders. While grouped together, this category includes a diverse set of lenders:

• mortgage finance companies, which rely on CMHC securitization programs and therefore operate according to CMHC standards
• trust companies, which are themselves diverse, with some operating similarly to MIEs and others lending more conservatively
• insurance companies, which are the third main component of this category

Other lenders expanded their insured lending

Looking at the 4 quarters ending in Q3 2025 relative to the previous 4 quarters, other lenders originated 46% more mortgages. The biggest increase came from insured mortgage switches which doubled year-over-year, reaching $6.6 billion. The large number of renewals across the mortgage industry also led to a 40% increase in uninsured mortgage switches.

Other lenders were unique in experiencing a significant drop in same lender refinances. Insured same lender refinances fell 82% year-over-year. However, in the 4 quarters ending Q3 2024 this only represented 0.8% of originations. Uninsured same lender refinances also dropped by 15%. This represents only 3.5% of total originations.

Other lenders saw a drop in renewals

The other lender category is also unique in that it saw an 11% drop in same-lender renewals between Q3 2024 and Q3 2025. This is likely one source of the growth in mortgage switches in other lender categories. The $418 million drop in insured same lender renewals represents a 12% decrease. The drop in the uninsured same lender renewals was a slightly more modest 8% drop.

4. Mortgage investment entities (MIEs)

Mortgage investment entities are lenders who provide mortgage products to consumers who may not qualify for traditional loans. While their business practices are regulated, they aren’t subject to the same prudential regulations of their risk exposure as other lenders. Mortgages offered by MIEs often feature:

• interest-only payments
• short terms of less than a year
• high interest rates

These lenders offer mortgages to lower-credit-quality consumers. Their lending is riskier than traditional lenders, but these lenders benefit by charging higher interest rates.

MIEs experienced faster growth than the national average for lenders

The largest 25 MIEs in Canada managed $11.5 billion in assets in Q3 2025, up 8.8% from Q3 2024.

This marks the fastest growth since 2022 and outpaced the national year-over-year increase in residential mortgage debt (4.8% increase, Q3 2024 to Q3 2025) for the fourth consecutive quarter.

MIEs’ share of the overall mortgage market is 1.3% for outstanding mortgages and 4.7% of originated mortgages (Figures 8a and 8b).¹⁶

The risk profile of MIEs decreased

At the end of Q3 2025, the overall risk level for MIEs decreased compared to the year before. They showed:

• year-over-year declines in foreclosure rates and stage 3 impairments,¹⁷
• reduced debt-to-capital ratios, supported by increased equity financing, making them more resilient to market stresses because they rely less on debt to fund their lending operations, and
• an increase in first-lien mortgages, which reduced lenders’ potential losses in the event of foreclosure because they are paid out before any other mortgage on the property

Despite year-over-year improvements in foreclosure rate and stage 3 impairments, these levels remain elevated compared to levels seen over the past 5 years. Consequently, loan-loss allowance remained elevated compared to pre-2024 levels (Figure 10).

The share of uninsured outstanding mortgages at MIEs with high TDS ratios (greater than 45%) increased in 2024-2025 but remain below that of chartered banks. In contrast, since Q3 2024, MIEs have held more than twice the share of mortgages with TDS ratios above 60% as chartered banks.

This marks a clear shift from 2020 to 2024, when both lender groups had similar shares, with MIEs’ share typically slightly lower.

Source: Mortgage Investment Corporations (MIC) Survey, Fundamentals Research Corp.