Canada isn’t in a mortgage crisis – but ‘the pressure on homeowners is real’

Canada's mortgage market is navigating a period of contained but genuine strain. National delinquency rates remain below pre-pandemic levels, yet residential mortgage debt crossed the $2.4 trillion mark in December 2025, up 4.8% year-over-year. The national 90-plus-day delinquency rate also edged up to 0.24% in the fourth quarter of 2025, from 0.21% a year earlier.

Against that backdrop, a leading mortgage expert is urging homeowners not to wait for a lender's letter before taking stock of their finances. 

"Canada is not in a mortgage default crisis but the pressure on homeowners is real," said Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert.

"Many borrowers are still renewing mortgages that were taken out when rates were much lower, and even a modest increase in the rate can change the household budget quickly. The earlier homeowners review their options, the more flexibility they usually have to manage the impact."

The numbers support that caution. CMHC deputy chief economist Aled ab Iorwerth noted that mortgage arrears remain low by historical standards and the mortgage system is broadly stable, but acknowledged that pockets of significant stress exist beneath the surface, particularly in areas like Toronto and Vancouver where arrears have grown the most.

Ontario's mortgage delinquency rate climbed to 0.23%, overtaking the national average for the first time since at least 2012, while in Toronto the rate jumped from 0.15% in Q2 2024 to 0.24% in Q2 2025 – a roughly 60% year-over-year surge. 

The renewal wave and what it means for borrowers

Most Canadians renewing their mortgages in the current cycle face materially higher interest costs than when they first entered the market, a dynamic that has placed mortgage professionals on the front lines of some of the most financially consequential conversations their clients have had in a generation.

Uninsured mortgage switches increased 34% between the second half of 2024 and the second half of 2025, suggesting many borrowers are actively shopping rather than accepting the first offer put in front of them. 

Canada's mortgage renewal wave has been one of the most discussed industry trends of 2025 and 2026, with plenty of attention on the challenges faced by borrowers renewing at much higher costs than their original, pandemic-era contract.

Ontario-based broker Michelle Campbell of Mortgage Architects – A Better Way told Canadian Mortgage Professional that many homeowners already anticipated the likelihood of a jump in payments and taken proactive steps to speak with a broker.

"If you really think about it, you've paid down your mortgage in those five years or three years and your income has likely gone up," Campbell said.

"There is some concern for sure, but I wouldn't say that it's panic from what I'm seeing." 

For Zlatkin, however, the absence of widespread panic is not a reason to delay planning. She highlights several steps homeowners should consider well before their mortgage comes up for renewal.

Starting the conversation early is chief among them. Reviewing options several months out can help borrowers understand where rates are sitting, what payment changes to expect, and whether switching lenders makes sense.

She also cautions against taking a lender's renewal offer at face value.

Comparing products across lenders can reveal whether another institution offers a better fit based on income, equity, credit profile, and longer-term goals.

Beyond the rate: what borrowers often overlook

Zlatkin is equally focused on what borrowers fail to consider beyond the headline rate.

Term length, prepayment privileges, penalties, portability, and flexibility all factor into whether a mortgage remains workable when circumstances change.

Extending an amortization period can reduce monthly payments but increases total interest paid over the life of the loan – a trade-off that deserves careful consideration rather than a reflexive yes or no.

For borrowers carrying high-interest debt, rolling balances such as credit cards or unsecured lines into a mortgage at renewal could improve monthly cash flow. But the calculus is not straightforward. Doing so can extend the repayment timeline, increase total interest paid, and convert previously unsecured debt into an obligation secured against the home. Zlatkin says those trade-offs should be understood fully before any decision is made.

Her broader message cuts to the heart of why arrears data, however modest in absolute terms, matters.

"Mortgage delinquency is often one of the last signs of financial strain, because most homeowners will cut back in other areas before missing a mortgage payment," she said.

"That's why even a small increase in arrears is worth paying attention to. It can suggest that some households have already used savings, leaned on credit, or reduced everyday spending to keep up. For borrowers coming up for renewal, the question isn't only whether they can make the next payment, but whether payments can be sustained over time."

Make sure to get all the latest news to your inbox on Canada's mortgage and housing markets by signing up for our free daily newsletter here.