Alternative lenders posted the highest levels of overdue mortgages in the latest data
Canada’s residential mortgage debt climbed above $2.4 trillion at the start of 2026 as higher borrowing costs and economic pressures pushed delinquency rates modestly higher, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).
The federal housing agency said the country’s mortgage market remained broadly stable despite mounting pressure on some households, particularly in Ontario and other high-cost urban centres.
In its latest Residential Mortgage Industry Report released Tuesday, CMHC said total residential mortgage debt rose 4.8% year over year in January 2026, reflecting continued growth in borrowing even as many homeowners faced higher renewal payments.
The report found the national rate of mortgages in arrears for 90 days or more increased to 0.24% in the fourth quarter of 2025, up from 0.21% a year earlier. While still below pre-pandemic levels, the increase marked a continued rise from the record low reached during the pandemic period.
CMHC attributed the increase to a combination of rising unemployment, elevated debt burdens, and higher interest rates affecting borrowers renewing mortgages originated during the low-rate environment of the early 2020s.
Ontario pressures intensify
The report highlighted Ontario as the province experiencing the sharpest deterioration in mortgage performance.
Mortgage delinquencies in Ontario rose 35% year over year to 0.27%, with Toronto, Barrie, and Windsor recording increases of at least 45% over the same period.
CMHC deputy chief economist Aled ab Iorwerth (pictured) said the mortgage system remained stable overall, although regional vulnerabilities were becoming more apparent.
“At the national level, mortgage arrears remain low by historical standards, and the mortgage system overall is stable, but pockets of significant stress still exist beneath the surface, particularly in areas like Toronto and Vancouver where arrears have grown the most,” ab Iorwerth noted.
The agency said broader economic conditions were also contributing to rising financial strain. Canada’s unemployment rate stood at 6.7% in March, while the household debt-to-disposable-income ratio climbed to 173.3% in the fourth quarter of 2025.
CMHC said this meant households owed an average of $1.73 in debt for every dollar of disposable income.
The report also noted increases in non-mortgage arrears, although the pace of growth slowed compared with earlier periods.
Borrowing habits shift
CMHC said borrowers increasingly favoured shorter mortgage terms and variable-rate products amid ongoing uncertainty surrounding interest rates and the broader economy.
Variable-rate mortgages accounted for 42% of mortgages originated at chartered banks in February, making them the most popular mortgage type among new borrowers.
The agency said many Canadians appeared reluctant to commit to traditional five-year mortgage terms because of uncertainty tied to inflation, monetary policy, and economic growth.
At the same time, alternative lenders, including mortgage investment entities serving borrowers who may not qualify for conventional financing, continued to expand rapidly.
That segment also recorded the highest delinquency rates, with 90-plus-day arrears reaching 1.96% in the third quarter of 2025.
The country’s largest banks continued to hold the biggest share of outstanding mortgages, with balances rising 0.6% year over year in the third quarter of 2025. However, their share of newly originated mortgages declined 6.9% during the same period.
CMHC said concerns surrounding the mortgage renewal “cliff” were beginning to ease as the peak renewal wave passed in 2025. Renewal volumes are expected to moderate through 2026 and 2027, although many households renewing mortgages will still face significantly higher borrowing costs than during their previous terms.
