Canada’s national mortgage delinquency rate fell for the first time in three years in the second quarter of 2025, but Ontario and B.C. continued to see rising missed payments, pointing to “financial stress” in the country’s most expensive markets.
The national mortgage delinquency rate fell slightly to .22 per cent in Q2, according to the latest Residential Mortgage Industry Report from Canada Mortgage and Housing Corporation.
Ontario’s delinquency rate (0.23 per cent) was above the national average for the first time since at least 2012, as delinquencies grew 44 per cent year-over-year. Toronto delinquencies surged 60 per cent to 0.24 per cent.
In British Columbia, delinquency rates increased from 0.16 per cent to 0.19 per cent over the same period.
CMHC said the results from Ontario and B.C. suggest that “pockets of financial stress remain,” despite the improving national picture, led by lower delinquency rates in Atlantic Canada, Quebec and the Prairie provinces.
Mortgage debt increases, but are households keeping up?
CMHC noted that a key vulnerability it has been monitoring for many years is the “elevated” levels of household debt, three-quarters of which is mortgage debt.
Residential mortgage debt reached $2.3 trillion in August, up 4.8 per cent year-over-year, on the back of an uptick in residential sales activity since June and relatively stable national prices, said CMHC.
This increase coincided with a similar rise in household disposable income of 4.6 per cent in Q2, the slowest pace since 2023, due to limited gains in employment and weaker economic conditions.
Household debt elevated, but stable
Household debt in Canada remains high, relative to historical and international norms, with a debt-to-disposable income ratio of 181.8 per cent, said CMHC. There was virtually no change year-over-year.
This is an improvement compared to a ratio of 193.3 per cent three years earlier, meaning households are more resilient to economic shocks than in 2022.
Borrowers shift to fixed-rate mortgages
Since Q2, variable-rate mortgages have declined in popularity, reversing the trend that began in the summer of 2024.
Fixed-rate mortgages with three to five-year terms regained their position as the most popular choice, accounting for 43 per cent of newly extended mortgages in August.
Fixed-rate mortgages with terms of five years or more accounted for 17 per cent of newly extended mortgages in August, remaining historically low, despite recent increases.
New report shines light on affordability challenges
To buy a typical home, Ontario families earning the local median income would have to devote most of their after-tax dollars to a monthly mortgage payment, according to a report released Thursday by the Fraser Institute, a public policy think tank.
The study finds that in Ontario’s 14 largest cities, the monthly mortgage payment required to buy a typical home ranged between 50.4 per cent (Ottawa-Gatineau) and 110.2 per cent (Toronto) of the local median after-tax family income – after a 20 per cent down payment on the home purchase.
“Housing affordability is a function of both home prices and incomes, and as wages and incomes have flatlined across Ontario in recent years, housing unaffordability crisis has worsened,” said Steven Globerman, Fraser Institute senior fellow and study co-author.
It’s a similar story across Canada. From 2014 to 2023, a mortgage payment for a typical home climbed from 29.9 per cent of median after-tax family income to 56.6 per cent on average across Canadian cities, according to the report.
‘Challenging’ affordability country-wide
While Vancouver and Toronto were significantly less affordable than all other major Canadian cities for both homeownership and rent, nearly every city experienced declining housing affordability from 2014 to 2023, the study found.
By 2023, no Canadian city had typical homes on the market that were affordable for families earning the local median after-tax income, absent an unusually large downpayment or external financial support.
In 2014, a 20 per cent down payment on a typical home required the equivalent of 14.1 months of median after-tax family income across the 60 cities included in the study. By 2023, that rose to 22 months, an increase of 56 per cent, according to the report.
