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- Residential Mortgage Industry Report — Fall 2025 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.
Overview of mortgage trends
In the first half of 2025, the mortgage industry reacted to significant changes in the rules for mortgage insurance. Interest rates were stable, but ongoing trade policy uncertainty weighed on economic confidence. Borrowers avoided traditional 5-year fixed-rate mortgages, hoping that interest rates would fall before their renewal date. RBC’s acquisition of HSBC’s Canadian business continues to affect market share data.
Borrowers shift to fixed-rate mortgages
Since Q2 2025, variable rate mortgages at chartered banks have declined in popularity, reversing the trend that began in the summer of 2024 (see Figure 1). This shift toward fixed-rate mortgages was driven by their lower interest rates compared to variable-rate mortgages at the time of origination. It may also reflect heightened economic uncertainty.
Fixed-rate mortgages with terms over 3 to under 5 years regained their position as the most popular choice, accounted for 43% of newly extended mortgages in August 2025.
Fixed-rate mortgages with terms of 5 years or more accounted for 17% of newly extended mortgages in August 2025, remaining historically low despite recent increases.
Mortgage debt growth increases, while debt levels stay high
An uptick in residential sales activity since June 2025 and relatively stable national average prices led to year-over-year growth in mortgage debt. In August 2025, residential mortgage debt reached $2.3 trillion, up 4.8% from a year earlier.1 Growth remains slower than historical averages but faster than in 2024.
Limited gains in employment, combined with weaker economic activity, contributed to a more gradual increase in households’ disposable income. During Q2 2025, disposable income rose by 4.6%, year-over-year, representing the most modest pace since 2023.2 This increase coincided with a similar rise in household debt. As a result, the household debt-to-disposable-income ratio remained stable compared with a year earlier at 181.8% in Q2 2025. This reversed the trend of 7 consecutive quarters of year-over-year declines.3
Household debt as a share of GDP remained elevated but unchanged from a year earlier, at 100.2% in Q2 2025.4
Big 6 banks grow their market share through acquisitions
The Big 6 banks increased their share of outstanding mortgages by 2.6 percentage points in Q1 2025 compared to Q1 2024 (see Figure 2). This was mainly due to lender acquisitions during the year. The category “other chartered banks” was the other lender segment to see a noticeable shift in market share, which decreased by 1.4 percentage points in Q1 2025 compared to Q1 2024. This change was mainly due to the Royal Bank of Canada’s acquisition of HSBC Bank Canada at the end of Q1 2024. HSBC had been classified under the “other chartered banks” category.
The Big 6 banks and credit unions gained market share in originated mortgages. These include new mortgages for the purchase of property, refinances or when borrowers switch lenders. Meanwhile, the other 4 lender segments saw declines in market share.5 Part of this shift is likely attributed to the RBC acquisition of HSBC, with some of HSBC’s business moving to other traditional lenders.
Because different lenders — notably mortgage investment entities (MIEs) — have shorter mortgage terms, their share of originations is higher than their share of outstanding because the mortgages do not remain on their books for as long. Conversely, the Big 6 have had a lower share of originations compared to their share of outstanding mortgages because they have longer mortgage terms than MIEs.
Figure 2: Big 6 Banks Increase Market Share in the First Quarter of 2025
Traditional lenders
The traditional lenders category includes chartered banks, credit unions and other regulated or quasi-regulated lenders, such as mortgage finance companies. These lenders typically offer both insured and uninsured mortgages at moderate interest rates where payments are made regularly (often monthly) to repay both interest and principal.
In the first half of 2025, 2 big factors influenced traditional lenders:
- Rule changes for insured mortgages helped them grow that part of their business
- Many mortgages came up for renewal following significant activity in 2020 and 2021, combined with shorter terms in 2022 – 2023.
Chartered banks increase lending activity for both insured and uninsured mortgages
In the first half of 2025, chartered banks lent more compared to the first half of 2024 (see Figure 3). Mortgages for the purchase of property, refinances and renewals all rose. In total, there were $291 billion newly extended mortgages compared to $189 billion in H1 2024.
Same lender renewals more than doubled compared to the first half of 2024, in large part due to the prevalence of shorter-term mortgages in recent years. The removal of the mortgage stress test for borrowers switching lenders at renewal led to uninsured lender switches increasing 67% (to $19 billion). This change allowed borrowers to shop around for competitive rates and likely contributed to a 25% drop in interest rates on uninsured renewals between Q1 2024 and Q2 2025. In comparison, interest rates on new uninsured mortgages declined by 17% during the same period.6
According to the Mortgage Consumer Survey, 28% of refinances were to fund home improvements or renovations, 22% were to reconcile debts, and 14% were to decrease the amount of mortgage payments.
Mortgage payments becoming more manageable for borrowers
New uninsured borrowers at chartered banks spent a lower share of their income on servicing mortgages because interest rates are lower (see Table 1). As a result, the share of mortgages with a total debt service (TDS) ratio above 45% dropped for the third year in a row. It fell from 33.8% of originations in Q2 2023 to 31.3% in Q2 2025. See Box 1 for a discussion of averages in risk metrics.
Box 1: Understanding averages in risk metrics
Risk metrics typically looked at include debt-service ratios, loan-to-value ratios, credit bureau scores and amortization periods. They are usually presented as averages when looking at the overall market-level risk. However, there are 2 weaknesses with using an average of risk metrics to understand the true market-wide risk level.
- Loan risk does not increase one-for-one with the risk metric. At high-risk levels, even a small increase significantly raises the likelihood of default. At lower risk levels, an equal increase has little effect on repayment probabilities. Although both would shift the average risk metric by the same amount, their impact on the market’s true level of risk is very different.
- Averages for risk metrics may not show much variation, and, therefore may not be useful in tracking overall market risk. An example of TDS ratios is provided below. Despite fluctuations in monthly payments over the past 3 years as interest rates increased and then decreased, the average TDS ratio saw little change. Interest rate movements had minimal impact on the overall ratio. Therefore, where possible, this report illustrates the share of mortgages beyond reasonable thresholds where the risk of non-payment is elevated.
| Quarter | 2022 Q1 | 2023 Q1 | 2024 Q1 | 2025 Q1 |
|---|---|---|---|---|
| Average TDS | 33.72 | 34.75 | 35.00 | 35.20 |
Source: CMHC NHA MBS mortgage reporting, CMHC calculations.
The share of new uninsured mortgages at chartered banks with amortizations longer than 25 years remained above 60% in Q2 2025 for the fourth consecutive year.
Despite falling interest rates and stabilizing house prices, borrowers still opted for longer amortization periods. While attractive to borrowers due to lower monthly payments, they increase the risk of real financial loss to lenders in the event of default. This is because a smaller amount of the principal will have been repaid over the life of the mortgage.
At first, the trend to longer amortization periods was a response to rapidly rising interest rates. However, this change now seems to be a lasting shift rather than a temporary adjustment.
| 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 | 2024 Q1 | 2024 Q2 | 2024 Q3 | 2024 Q4 | 2025 Q1 | 2025 Q2 | |
|---|---|---|---|---|---|---|---|---|---|---|
| TDS Ratio (%) | ||||||||||
| Greater than 45% | 35.5 | 33.8 | 34.1 | 35.7 | 35.4 | 33.2 | 32.4 | 34.4 | 33.4 | 31.3 |
| 40% to 45% | 26.9 | 27.2 | 28.5 | 28.6 | 27.8 | 28.5 | 28.7 | 28.4 | 28.8 | 27.6 |
| Less than 40% | 37.6 | 39.0 | 37.4 | 35.7 | 36.8 | 38.3 | 38.9 | 37.2 | 37.9 | 41.1 |
| Amortization (%) | ||||||||||
| 25 years or less | 37.4 | 36.5 | 37.7 | 37.3 | 35.9 | 40.0 | 37.7 | 34.7 | 32.7 | 38.0 |
| Over 25 years | 62.6 | 63.5 | 62.3 | 62.7 | 64.1 | 60.0 | 62.3 | 65.3 | 67.3 | 62.0 |
| LTV Ratio (%) | ||||||||||
| Less than 65% | 40.6 | 39.4 | 41.3 | 41.4 | 39.7 | 41.7 | 39.6 | 39.4 | 38.4 | 38.2 |
| Between 65% and 75% | 16.5 | 16.3 | 16.4 | 16.7 | 16.6 | 16.3 | 16.4 | 17.2 | 17.5 | 17.2 |
| Greater than 75% | 42.9 | 44.3 | 42.4 | 41.9 | 43.7 | 42.0 | 44.0 | 43.4 | 44.1 | 44.6 |
Source: CMHC residential mortgage data reporting of NHA MBS issuers; CMHC calculations
Refinances and mortgage switches driving credit union growth
Credit unions experienced a 20% year-over-year growth in originations for the 4 quarters ending March 31, 2025.7
Looking at the components of overall originations, insured same lender refinances increased 103% and insured switches rose 187%. Financial reasons, such as reconciling debts and reducing the size of mortgage payments drove the increase in refinancing, but renovations were the largest single reason to refinance, according to the Mortgage Consumer Survey. The increase in financial reasons for refinancing suggests consumers are in tighter financial positions. Mortgage switches are mortgages for those who either renew or refinance with a new lender.
Insured mortgages for the purchase of property were up 25%. The rule changes discussed above apply equally to all lender types, including credit unions. Credit unions also grew their uninsured business reflecting strength of the overall housing market. While uninsured mortgages for the purchase of property rose 13%, uninsured same lender refinances were up 37% and switches were up 42%. However, 78% of originations were uninsured.
Alternative lenders
The alternative lending segment includes unregulated lenders who provide mortgage products to consumers who may not qualify for traditional loans. Mortgages offered by alternative lenders can feature interest-only payments, short-terms of less than a year and 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. In the first half of 2025, alternative lenders managed to improve their overall level of risk while they continued to grow their business.
Growth faster than national average
The largest 25 mortgage investment entities (MIEs) in Canada had $11.4 billion in assets under management in Q2 2025, up 6.5% from Q2 2024 (see Table 2). This growth outpaced the national year-over-year increase in residential mortgage debt (+5.0%) for the third consecutive quarter. It also represents 0.5% of the overall mortgage market.
Risk profile decreased
At the end of Q2 2025, the overall risk level for MIEs decreased compared to a year ago. This improvement was driven by:
- a year-over-year decline in foreclosure rates,
- reduced debt-to-capital ratios, making them more resilient to market stresses since they rely less on debt to fund their lending operations and
- an increase in first-lien mortgages, which reduces lenders’ potential losses in the event of foreclosure since they are paid out before any other mortgage on the property.
After rising in Q3 2023, stage 3 impairments8 for single-family homes and foreclosure rates stayed relatively high and they remained elevated through Q2 2025. Consequently, MIEs continued to adopt more conservative business practices. This included shifting a greater share of their lending toward single-family homes, which usually carry lower risk than multi-family or commercial properties. Loan loss allowance also remained elevated compared to pre-2024 levels.
| 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 | 2024 Q1 | 2024 Q2 | 2024 Q3 | 2024 Q4 | 2025 Q1 | 2025 Q2 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Financial Metrics | ||||||||||
| Assets under management (AUM) in $M of top 25 MIEs | 10,564 | 10,196 | 10,287 | 10,207 | 10,475 | 10,691 | 10,608 | 10,940 | 11,042 | 11,382 |
| Average lending rate to single-family | 8.6% | 8.9% | 9.5% | 10.4% | 10.5% | 10.5% | 10.4% | 10.3% | 10.2% | 9.8% |
| Average share of first mortgages — single-family | 79.2% | 75.5% | 75.5% | 74.8% | 74.4% | 73.8% | 72.5% | 72.4% | 72.3% | 74.3% |
| Average loan-to-value (LTV) ratio — single-family | 58.0% | 55.9% | 57.6% | 57.9% | 57.9% | 57.8% | 58.5% | 58.0% | 58.3% | 58.5% |
| Debt to capital — single-family | 21.8% | 21.7% | 21.7% | 22.7% | 22.8% | 21.7% | 22.2% | 22.0% | 20.6% | 19.2% |
| Stage 3 impairment — single-family | 2.4% | 2.7% | 2.7% | 4.7% | 4.8% | 5.0% | 6.0% | 5.2% | 5.0% | 4.9% |
| Foreclosure rate — single-family | 1.4% | 1.4% | 1.5% | 3.8% | 3.6% | 3.5% | 3.4% | 2.6% | 2.8% | 2.9% |
| Exposure to single-family properties | 49.8% | 52.4% | 54.5% | 58.9% | 58.8% | 58.1% | 63.0% | 61.8% | 63.3% | 64.1% |
| Loan loss allowance | 0.4% | 0.4% | 0.47% | 0.62% | 0.73% | 0.76% | 0.78% | 0.68% | 0.71% | 0.72% |
| Geographical distribution | ||||||||||
| British Columbia | 40.8% | 40.4% | 40.5% | 39.5% | 39.7% | 39.4% | 36.8% | 35.3% | 35.6% | 36.1% |
| Alberta | 5.9% | 6.3% | 6.4% | 6.8% | 7.1% | 7.2% | 7.9% | 8.4% | 9.0% | 9.1% |
| Ontario | 45.6% | 46.3% | 46.6% | 48.1% | 49.1% | 49.0% | 51.0% | 51.3% | 50.2% | 50.1% |
| Quebec | 6.3% | 5.4% | 4.8% | 3.9% | 2.0% | 2.1% | 2.0% | 2.5% | 2.7% | 2.5% |
| Others | 1.5% | 1.7% | 1.7% | 1.8% | 2.1% | 2.3% | 2.2% | 2.4% | 2.5% | 2.4% |
Source: Mortgage Investment Corporations (MIC) Survey, Fundamentals Research Corp.
Risks and vulnerabilities
This section explores risks in the mortgage market that could negatively impact the overall financial and economic stability of Canada. Risks would come from lenders seeing financial losses, so we focus on missed payments.
Vulnerabilities are factors that weaken the ability of the mortgage industry to react to future shocks. A key vulnerability we have been monitoring for many years is the elevated levels of household debt, three quarters of which is mortgage debt.
Mortgage delinquency rate increasing in Ontario and British Columbia
The national mortgage delinquency rate dropped slightly in the second quarter of 2025 for the first time in 3 years to 0.22%, but it remains above Q2 2024 when it was 0.19%. Although it fell slightly, there were changes in delinquency rates across the country.
The quarter-over-quarter drop in the national delinquency rate was led by falling delinquency rates in Atlantic Canada, Quebec and the Prairie provinces. In contrast, in Ontario, the mortgage delinquency rate (0.23%) was above the national average for the first time since at least 2012. In British Columbia, mortgage delinquency rates also increased from 0.16% to 0.19% between Q2 2024 and Q2 2025.
In Toronto, the mortgage delinquency rate increased from 0.15% in Q2 2024 to 0.24% in Q2 2025, an increase of 60%.
Mortgage delinquency rates in Toronto and Vancouver began increasing at the same time as the national delinquency rate in Q4 2022. Toronto’s delinquency rate began rising faster than the national rate in Q3 2023. Vancouver’s delinquency rate has risen more inconsistently but has grown faster than the national rate over the past 2 years.
Delinquency rates fell slightly at the start of 2025 for Mortgage Investment Entities
Delinquency rates of 90 days or more for the MIE segment decreased in Q1 2025 compared to Q4 2024 but remain higher than a year ago (see Figure 4)9. At credit unions and chartered banks, delinquency rates continued to edge upward, although they remained below pre-pandemic levels. Other non-bank lenders saw a noticeable decrease in delinquency rates in Q1 2025; however, the changes are mainly due to the reclassification of lenders.
Many mortgages will be renewed at higher interest rates
Most borrowers have handled the increase in monthly payments at renewal well. However, the number of borrowers facing renewal remains high due to the upsurge in mortgages originated in 2020 and 2021.
In the last 6 months of 2025, over 750,000 mortgages will come up for renewal. This will be followed by another 1.15 million in 2026 and currently 940,000 scheduled for 2027. While interest rates have decreased, these borrowers will be renewing at higher interest rates than when they originally contracted their mortgage. For illustrative purposes, the average interest rate on 5-year, fixed-rate uninsured mortgages was 2.36% in July 2020 and 3.95% in July 2025, a 67% increase.
Elevated household debt stable
Household debt in Canada remains high relative to historical and international norms with a debt-to-disposable income ratio of 181.8% in Q2 2025.10 This is below the high for Q2 of 193.3% in 2022. This means households are more resilient to economic shocks than in 2022, but their financial position remains unchanged from 12 months ago when the ratio was 181.7%.
Mortgage holders’ delinquency rates increasing faster than credit consumers for those without a mortgage
Mortgage delinquencies lag delinquencies of other credit products. This is because consumers typically prioritize mortgage payments over other debts. Credit card and line of credit delinquency rates are both up in Q2 2025 compared with Q2 2024. The auto loan delinquency rate is slightly below Q2 2024 levels as that quarter saw a spike in delinquencies (see Figure 5).
Delinquency rates for credit cards, auto loans and lines of credit increased for mortgage holders. As leading indicators of mortgage default, this suggests mortgage consumers face higher financial stress.
Consumers without a mortgage fared slightly better. Their auto loan delinquency rate fell by 8% and their credit card and line of credit delinquency rates increased less than for mortgage holders. However, the delinquency rates are higher for consumers without a mortgage (see Figure 6).
Glossary
Footnotes
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