The first quarter saw a spike in overall insolvencies, sparked largely by big upticks in two pricey markets
Canada’s headline insolvency figure is now at its highest since 2009, according to new data released by Equifax. Still, the outlook is far from uniform across the country – and unsurprisingly, some regions are feeling the pain much more than others.
The national insolvency rate for 2026’s first quarter jumped by 18.8% compared with the same time last year, driven largely by oversized levels in Ontario and British Columbia where larger mortgage balances and higher renewal rates are hitting household cashflow harder than anywhere else in Canada.
In Ontario, mortgage balance delinquencies spiked by 52% in Q1. In British Columbia, they were 36% higher. Those figures, Equifax Canada’s vice president of analytics and consulting Kathy Catsiliras told Canadian Mortgage Professional, “skewed” the national figure and suggested more borrowers in those provinces (and especially Toronto and Vancouver) are struggling.
That dovetails with recent analyses by the national housing agency, Canada Mortgage and Housing Corporation (CMHC), which has outlined its greater concern for Toronto borrowers renewing their mortgages than homeowners in other parts of the country.
The mortgage renewal wave – a trend of homeowners renewing at much higher rates than they initially took out – has caused disproportionate strain for borrowers in Toronto and Vancouver, traditionally the country’s two priciest urban markets.
While the outlook deteriorated in British Columbia and Ontario, improvements in mortgage delinquency metrics appeared in Alberta, Newfoundland, Quebec, Saskatchewan, and the Yukon, Equifax said.
Canadians determined to keep their homes despite growing financial stress
Catsiliras also sees another telling detail in the first-quarter data, linked not just to rising insolvency volumes but to who’s filing and why.
Homeowner insolvency volumes were more than 11% higher from the fourth quarter of last year, and more than 90% of those individuals chose consumer proposals over bankruptcy.
A consumer proposal is a formal, legally binding arrangement allowing a debtor to repay creditors on a structured schedule while retaining their assets, including their home.
That’s a deliberate pattern, according to Catsiliras. “A lot of the insolvency rates that we’re seeing an increase in is really tied to homeowners that want to protect their assets but obviously have a mountain of non-mortgage debt, and they’re trying to find a way to formally reduce that through more structured payments so that they can stay afloat,” she said.
“They’ve hit an inflection point. They’re looking at leveraging a consumer proposal as a way to recover from this financial position.”
It’s often said that the last thing consumers want to do is lose their home – and that’s reflected in the new data. “It’s an asset that they have and they’ve worked very hard towards maintaining,” she said.
“So that is the brunt of the insolvency rate increase. It’s skewed towards consumer proposals, specifically coming from homeowners trying to protect their asset.”
Non-mortgage debt levels decline
A positive from the survey is that non-mortgage debt levels slipped, falling by over $487 million in the first quarter and marking its first decline for some time.
Consumers appear to be taking a more cautious approach to spending amid wider economic concerns – reflected in a dip in new credit card originations to their lowest level in four years, while new captive auto loans were also down.
Catsiliras struck a cautious note on that trend. “A lot of that is tied back to some prudence and discipline with consumers during the holiday period not necessarily spending as much as they could, and obviously going into the first quarter paying down debt levels,” she said.
Still, it’s too early to say whether that trend will continue. “The fact that non-mortgage debt levels have decreased is great, but that’s only based on one quarter of data,” Catsiliras said.
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