IMPORTANT Most data in this report is current to the end of 2024. New Equifax Canada data shows delinquency rates continued rising in Q1 2025 in Ontario and BC, aligning with Mathieu Laberge’s November 2024 forecast in Mortgage Arrears Expected to Rise. The Fall edition will cover the full first half of 2025.
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 | Traditional Lending | Alternative Lending
Overview of mortgage trends and economic changes
Borrowers shift to variable and shorter-term mortgages
Expectations around rate cuts pushed more borrowers toward variable-rate and shorter-term fixed-rate mortgages. Variable-rate mortgages became the most popular type again in early 2025, bouncing back after a sharp drop in spring 2024. The share of borrowers choosing fixed-rate mortgages with terms longer than 3 years, but less than 5 years also stayed high compared to other term lengths.
Mortgage debt growth slows, but debt levels stay high
In February 2025, residential mortgage debt rose 4.5% compared to February 2024, reaching $2.3 trillion.1 This growth was slower than recent and historical averages. Although mortgage debt kept rising, higher incomes helped lower Canadians' household debt-to-disposable income. The ratio dropped from 175.0% in Q4 2023 to 169.7% in Q4 2024.2
While this reduction is positive, Canada still has the highest debt-to-income ratio among G7 countries.3 This remains a vulnerability, especially if economic pressures increase. Household debt as a share of GDP also stayed high, at 100.81% in Q4 2023 and 100.39% in Q4 2024.4 This was also the highest level among G7 countries.
Lower inflation expectations and interest rate cuts
Lower inflation expectations led the Bank of Canada to cut policy interest rates 7 times between June 2024 and March 2025. Lower borrowing rates may encourage more lending, but many borrowers could still hesitate because of ongoing economic uncertainty. Inflation has stayed within the Bank's target range since summer 2024. However, trade volatility and tariffs make it harder to predict future Bank of Canada interest rate decisions in 2025.
Rising popularity of variable-rate mortgages
Variable-rate mortgages sharply increased in popularity, making up 42% of all newly extended mortgages in February 2025. The premium on variable-rate mortgages, which peaked at 2.25% in July 2023, dropped to just 0.2% by February 2025. This helped boost demand for variable-rate mortgages.
Mortgages with terms between 3 and less than 5 years also stayed popular, accounting for 32% of new lending by chartered banks (see Figure 1). Fixed-rate mortgages with terms of 5 years or longer made up only 10% of newly extended mortgages, even though they were the top choice before the pandemic.
Important: newly extended mortgages vs. mortgage originations
We’ve updated how we report market share. Instead of using "newly extended mortgages," we now report on "mortgage originations." The key difference is that mortgage originations only include mortgages for property purchases, refinances and mortgage switches. Newly extended mortgages include all of those, plus mortgage renewals. We chose to exclude mortgage renewals to better represent the actual business activities of different types of lenders.
Big 6 banks grow their market share
The Big 6 banks increased their share of outstanding mortgages by 1.6 percentage points in Q4 2024 compared to Q4 2023. This growth was mostly because Royal Bank of Canada bought HSBC at the end of Q1 2024.
The Big 6 banks also gained a larger share of new mortgage originations compared to other chartered banks and non-bank lenders. However, this reflects a base year effect, as the Big 6 banks had lower originations in Q4 2023 (See Figure 2).
Figure 2: Big 6 Banks Slightly Increase Market Share of Outstanding Mortgages
Traditional lending: mortgage activity and borrower trends
Lending activity in 2024
In 2024, chartered banks had more origination activity especially for mortgages for the purchase of property, driven by more property sales and higher prices. At the same time, credit unions saw significantly more activity in refinances and switches. Borrowers took advantage of lower interest rates to reduce their monthly payments, but they kept long amortization periods. This helps lower monthly costs but can lead to more interest paid over the life of the loan and increase risk of losses for the lenders.
More lending at chartered banks in 2024
Chartered banks had more origination activity in the second half of 2024 than they did during the same period in 2023. This included increases in both mortgages for purchases of property and refinances (see Figure 4). Higher home sales and prices helped lead to a 12.8% year-over-year rise in mortgages for purchases of property.5 Lower interest rates encouraged refinancing, which increased by 39.6%.
The “other renewals and refinances” category grew by 84% from 2023 to 2024. This jump was partly due to the removal of the stress test for mortgage switches in November 2024. The shorter mortgage terms noted in the Overview also helped explain the increase in renewals.
Interest rate drops lower debt servicing
Borrowers took advantage of lower interest rates to reduce their total debt service (TDS) ratios.6 At chartered banks, the share of new uninsured borrowers with a TDS ratio over 50% fell from a peak of 16.6% in Q4 2022 to 14.8% in Q4 2024. This is close to the 13.6% level seen before rates started rising in Q4 2021.
Longer amortizations still common
However, new uninsured borrowers are still choosing long amortization periods. In Q4 2024, 65.3% of new uninsured borrowers at chartered banks had amortizations longer than 25 years. This is the highest share in recent years. Many extended their amortizations as rates rose to offset the increase in monthly payments. More interest rate cuts may be needed to bring this number closer to pre-2021 levels (50.4% in Q4 2020).
Credit unions see growth in refinancing
Credit unions experienced strong growth in refinances and switches in the second half of 2024, and a moderate increase in mortgages for purchases of property. Refinances and switches rose by more than 23% compared to the same time in 2023, mostly due to more insured refinancing. Mortgages for home purchases increased by over 7%, and overall mortgage activity rose more than 10%.
| 2022 Q1 | 2022 Q2 | 2022 Q3 | 2022 Q4 | 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 | 2024 Q1 | 2024 Q2 | 2024 Q3 | 2024 Q4 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| TDS Ratio | ||||||||||||
| Greater than 50% | 14.0 | 12.6 | 14.6 | 16.6 | 16.1 | 15.5 | 15.0 | 16.2 | 15.9 | 13.4 | 12.9 | 14.8 |
| 40% to 50% | 43.8 | 45.9 | 46.3 | 46.5 | 46.3 | 45.5 | 47.6 | 48.2 | 47.2 | 48.4 | 48.2 | 48.0 |
| Less than 40% | 42.1 | 41.5 | 39.1 | 36.9 | 37.6 | 39.0 | 37.4 | 35.7 | 36.8 | 38.3 | 38.9 | 37.2 |
| Amortization | ||||||||||||
| 25 years or less | 38.1 | 37.4 | 41.4 | 39.7 | 37.4 | 36.5 | 37.7 | 37.3 | 35.9 | 40.0 | 37.7 | 34.7 |
| Over 25 years | 61.9 | 62.6 | 58.6 | 60.3 | 62.6 | 63.5 | 62.3 | 62.7 | 64.1 | 60.0 | 62.3 | 65.3 |
| LTV Ratio | ||||||||||||
| Less than 65% | 40.7 | 39.0 | 39.7 | 40.3 | 40.6 | 39.4 | 41.3 | 41.4 | 39.7 | 41.7 | 39.6 | 39.4 |
| Between 65% and 75% | 16.8 | 17.0 | 16.5 | 16.2 | 16.5 | 16.3 | 16.4 | 16.7 | 16.6 | 16.3 | 16.4 | 17.2 |
| Greater than 75% | 42.6 | 44.0 | 43.8 | 43.5 | 42.9 | 44.3 | 42.4 | 41.9 | 43.7 | 42.0 | 44.0 | 43.4 |
Source: CMHC residential mortgage data reporting of NHA MBS issuers; CMHC calculations
Alternative lending segment
Growth faster than national average
The largest 25 Mortgage Investment Entities (MIEs) in Canada had $10.9 billion in assets under management, in Q4 2024, up 7.2% from the previous year. This growth surpasses the one recorded for national residential mortgage debt (+4.2%) over the same period and marks the fastest growth by the top 25 MIEs over the past year and a half.
Risk profile increased modestly
At the end of 2024, the risk level for mortgage investment entities (MIEs) increased slightly compared to a year ago, despite improvement in the last quarter of 2024. A year-over-year decrease in first lien mortgages, which makes MIEs more vulnerable to larger losses in the event of foreclosures, and an increase in stage 3 impairments for single-family homes raised the risk profile.7,8 However, a lower foreclosure rate, both year-over-year and from the previous quarter, helped reduce their risk profile.
To manage the higher risk, MIEs have increased their loan loss allowances. They also shifted their lending focus more toward single-family homes, which usually carry lower risk than multi-family or commercial properties.
| Q4-2022 | Q1-2023 | Q2-2023 | Q3-2023 | Q4-2023 | Q1 -2024 | Q2-2024 | Q3-2024 | Q4-2024 | |
|---|---|---|---|---|---|---|---|---|---|
| Financial Metrics | |||||||||
| Assets under managment (AUM) in $M of top 25 MIEs | 10,427 | 10,564 | 10,196 | 10,287 | 10,207 | 10,475 | 10,691 | 10,608 | 10,940 |
| Average lending rate to single-family | 8.3% | 8.6% | 8.9% | 9.5% | 10.4% | 10.5% | 10.5% | 10.4% | 10.3% |
| Average share of first mortgages — single-family | 80.1% | 79.2% | 75.5% | 75.5% | 74.8% | 74.4% | 73.8% | 72.5% | 72.4% |
| Average loan-to-value (LTV) ratio - single-family | 58.0% | 58.0% | 55.9% | 57.6% | 57.9% | 57.9% | 57.8% | 58.5% | 58.0% |
| Debt to capital — single-family | 23.0% | 21.8% | 21.7% | 21.7% | 22.7% | 22.8% | 21.7% | 22.2% | 22.0% |
| Stage 3 impairment — single-family | 1.7% | 2.4% | 2.7% | 2.7% | 4.7% | 4.8% | 5.0% | 6.0% | 5.2% |
| Foreclosure rate — single-family | 1.3% | 1.4% | 1.4% | 1.5% | 3.8% | 3.6% | 3.5% | 3.4% | 2.6% |
| Exposure to single-family properties | 48.6% | 49.8% | 52.4% | 54.5% | 58.9% | 58.8% | 58.1% | 63.0% | 61.8% |
| Loan lost allowance | 0.3% | 0.4% | 0.4% | 0.5% | 0.6% | 0.7% | 0.8% | 0.8% | 0.7% |
| Geographical distribution | |||||||||
| British Columbia | 41.2% | 40.8% | 40.4% | 40.5% | 39.5% | 39.7% | 39.4% | 36.8% | 35.3% |
| Alberta | 5.9% | 5.9% | 6.3% | 6.4% | 6.8% | 7.1% | 7.2% | 7.9% | 8.4% |
| Ontario | 44.9% | 45.6% | 46.3% | 46.6% | 48.1% | 49.1% | 49.0% | 51.0% | 51.3% |
| Quebec | 5.0% | 6.3% | 5.4% | 4.8% | 3.9% | 2.0% | 2.1% | 2.0% | 2.5% |
| Others | 3.0% | 1.5% | 1.7% | 1.7% | 1.8% | 2.1% | 2.3% | 2.2% | 2.4% |
Source: Mortgage Investment Corporations (MIC) Survey, Fundamentals Research Corp.
Note: Due to a change in methodology for calculating averages implemented in this edition, the numbers presented in this report cannot be directly compared to those before the fall 2024 edition.
Delinquency rates grows in 2024
Similar to the Fall 2024 report, delinquency rates of 90 days or more have increased across all lender types. The broader alternative segment and other non-bank lenders have experienced noteworthy increases in delinquency rates over the past year, reaching 1.30% and 0.31% in Q4 2024, respectively.9 In contrast, delinquency rates at credit unions and chartered banks rose more slowly and remain low.
Risks and vulnerabilities to the housing finance system
How the economy affects mortgage risk
Unemployment is the main cause of mortgage default, so the overall economy is the biggest source of risk in the mortgage market. This makes it hard to assess risks during uncertain economic times. Mortgage lenders entered 2025 in good financial health, which should help them handle the uncertainty. In 2024, mortgage delinquency rates stayed near historic lows outside of the pandemic. However, high household debt and mortgage renewals at higher interest rates remain vulnerabilities for the Canadian economy.
Mortgage delinquency rates are rising
The mortgage delinquency rate kept rising in 2024, reaching 0.21% in Q4 2024. This is up from a record low of 0.14% in 2022 and 0.17% at the end of 2023, but still lower than the 0.29% seen in 2019. The rise in mortgage delinquencies has not been even across Canada. Ontario saw a large increase, with the rate jumping from 0.13% in Q4 2023 to 0.20% in Q4 2024. In Toronto, the rate rose from 0.12% to 0.20% over the same period. PEI and BC also experienced noticeable increases — from 0.13% to 0.23% and from 0.13% to 0.17%, respectively. By contrast, delinquency rates fell in New Brunswick, Saskatchewan and Alberta. However, these provinces still have some of the highest delinquency rates at 0.26%, 0.44% and 0.27%, respectively.10
Other consumer debt also shows stress
Delinquency rates for other types of debt also went up from Q4 2023 to Q4 2024. Auto loan delinquencies rose from 2.09% to 2.27%, lines of credit from 0.72% to 0.86% and credit cards from 1.56% to 1.71%. The delinquency rate for HELOCs (Home Equity Lines of Credit) stayed the same. Unlike previous years, mortgage holders showed slightly bigger increases in delinquency rates than non-mortgage holders. This is important because mortgages are usually the last payment Canadians default on. The increase could signal that mortgage delinquencies may continue rising toward 2019 levels in 2025. However, whether this happens will depend on whether households continue to have enough income to meet their payments.
Rising debt levels and household budgets
Debt helps households buy homes, but it also brings risks, especially if unemployment rises sharply. Outstanding mortgage debt grew 4.5% year-over-year in February 2025, with real growth of 1.5%.11 Even though savings rates improved (6.1% in 2024 compared to 4.6% in 2023) and household debt-to-income ratios dropped, the rising cost of living and higher debt-servicing costs put a lot of pressure on household budgets over the past year.12 (See this Observer article: Exploring the Impacts of Household Debt on Canada's Economy.)
More mortgages are uninsured
The share of outstanding mortgages that are uninsured continued to grow in 2024, reaching a record high of 75%. This puts lenders at greater risk of financial losses if mortgage delinquencies increase. Not only has the share of insured mortgages declined, but the actual dollar value of insured mortgages has been falling since 2016.
What to expect with mortgage renewals
About 1.2 million fixed-rate mortgages will be up for renewal in 2025, and another 1 million in 2026. These renewals will not face interest rates as high as those who renewed in 2024. Borrowers who renewed in 2024 managed the higher interest rates partly by extending their amortization periods, as mentioned in the Traditional Lenders section. (See the Observer article: Impact of Interest Rates and Housing Affordability.)
Mortgage funding trends | Credit union market share across the country
Housing finance research highlights
This section looks at selected trends that can have a long-term impact on the residential mortgage industry. As these trends continue to change, it is important for policy makers and the financial industry to keep studying them to understand their effects on financial stability.
A. Mortgage funding trends
Mortgage funding is how lenders raise the money they need to offer home loans. Sources of funding include deposits, securitization and other financial tools. These enable lenders provide capital for home loans and keep the mortgage market running smoothly.
Key findings
- Despite the increase in the limit for covered bond issuances, the share of the uninsured market funded by covered bonds stayed almost the same in 2024 as in 2019 (22% in 2019 compared to 23% in 2024). However, this share peaked at 35% in Q2 2020 when rules were loosened as part of the COVID-19 response.
- CMHC securitization programs (Canada Mortgage Bonds and NHA Mortgage-Backed Securities) provide about 90% of the funding for insured mortgages in Canada.
Main sources of mortgage funding
- Deposits and other (61%): Savings accounts, checking accounts, other deposit accounts, equity funding and unsecured debt. These fund both insured and uninsured mortgages. This category is calculated as the remaining share after accounting for other funding sources.
- Covered bonds (13%): Debt securities backed by mortgage pools. Investors are protected because they have claims both against the lender and the mortgage pool. Only uninsured mortgages are funded this way.
- Canada Mortgage Bonds (CMB) (12%): Debt securities issued by the Canada Housing Trust and guaranteed by CMHC. These bonds offer safe, fixed returns and fund insured mortgages.
- NHA Mortgage-Backed Securities (NHA MBS) (12%): Public securities guaranteed and managed by CMHC, backed by pools of insured mortgages.
- Private securitization (1%): Includes residential mortgage-backed commercial papers and residential mortgage-backed securities. These fund uninsured mortgages.
B. Credit union market share across the country
A regular feature in this report is the market share of different lender types — banks, credit unions, mortgage investment entities and other non-bank mortgage lenders. With new data from the Quarterly Survey of Financial Statements (QSFS) combined with Equifax data on mortgage balances, we can now show credit union market shares by province. Where credit unions are more active, provincial regulations, not federal, will have a bigger impact.
Key findings
- Credit union activity varies widely across Canada (see Figure 7). In Quebec and Manitoba, credit unions hold about 50% of outstanding mortgages. In all other provinces, they hold less than 30% of outstanding mortgages.
- Credit unions have the smallest market share in Nova Scotia, Alberta, Ontario and Newfoundland and Labrador — less than 10% of outstanding mortgages. However, even with a small market share, Ontario has the third-highest total value of mortgages held by credit unions ($55 billion).
Methodology
Because there is no provincial-level data from other lender types, we used Equifax Canada data on mortgage balances to estimate total outstanding mortgages by province. A possible issue with combining these sources is that coverage levels may vary across provinces. If Equifax totals are an underestimate, the credit union market share could seem bigger; if QSFS totals are an underestimate, market share could seem smaller.
However, when the results are added up nationally, they are close to national estimates. For Q3 2024, using Equifax and QSFS data, credit unions had a 17% national market share, compared to 13% using the traditional method. This suggests the Equifax/QSFS method slightly overestimates the credit union market share, but it’s unclear if this happens equally across all provinces.
Glossary
Footnotes
Visit our Housing Knowledge Centre for past editions or to browse our complete collection.
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