Canadian insolvencies hit 17-year high

Canadian insolvency volumes climbed to their highest level since 2009 in the first quarter of 2026, even as many consumers showed signs of financial restraint, according to new data from Equifax Canada.

The credit reporting firm’s Q1 2026 Market Pulse Quarterly Consumer Credit Trends and Insights report painted a divided picture of the country’s financial health: a growing share of Canadians are pulling back on borrowing, while a smaller but significant group appears to be running out of room.

Total consumer debt rose to $2.66 trillion, up 3.8% year over year. Non-mortgage debt, however, fell by more than $487 million in the quarter – its first decline in several quarters – as consumers appeared to cut back following the holiday season. New credit card originations dropped to a four-year low, and new captive auto loans fell nearly 5% year over year to a three-year low.

Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, said the pullback in holiday spending at the end of 2025 had a direct effect on credit card balances in the new year.

“This discipline enabled many Canadians to pay down balances during the first quarter, representing a critical shift in how consumers are navigating the current macroeconomic climate,” Oakes said.

Despite those signs of restraint, insolvency volumes rose 18.8% year over year to a 17-year high. Homeowner insolvency volumes jumped more than 11% from Q4 2025, with more than 90% of those individuals opting for consumer proposals rather than bankruptcy. The average non-mortgage debt carried by mortgage holders in insolvency reached $82,400, up 19% compared with two years ago.

Mortgage stress concentrated in key provinces

Approximately 1.5 million Canadians – about one in 21 consumers – missed at least one credit payment in Q1, a figure that remained stable from the previous quarter.

Mortgage stress was most acute in Ontario and British Columbia. The national mortgage delinquency balance rate climbed 32% year over year, but Ontario recorded a 52% increase, and British Columbia posted a 36% rise. Quebec, Nova Scotia, Saskatchewan, and New Brunswick, by contrast, showed measurable improvement in delinquency rates.

^{Source: Equifax Canada}

Among age groups, consumers aged 25 and under recorded their first year-over-year improvement in 90-plus-day delinquency rates since mid-2022. Seniors without mortgages showed strong financial momentum, with credit card payoff rates reaching 62.6% among those aged 65 and older. Seniors carrying mortgages into retirement, however, appeared to face significant cash-flow pressure.

On the auto sector, Oakes noted that lower vehicle prices alone were not enough to drive purchases.

“When you consider the substantial increases in insurance premiums, along with rising maintenance and fuel costs, it seems clear why Canadians are being more cautious before committing to a new vehicle purchase,” she said.

Looking ahead, Oakes cautioned that the mortgage renewal cycle was not yet finished, with significant volumes still expected through the remainder of 2026.

“The transition to significantly higher interest rates continues to fuel financial impact and payment pressure,” she said. “Consequently, ongoing monitoring of debts remains essential for Canadians.”