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If you’re a real estate fiend like me, you’ve been keeping a close eye on the housing market here in British Columbia and right across Canada. It seems like every other day we’re bombarded with financial and industry jargon, and lately, the words “default” and “arrears” have been popping up everywhere in the headlines. Let’s strip away the fancy language: a default simply means a homeowner hasn’t followed the rules of their mortgage contract—usually by missing payments—and arrears means that payment is officially overdue. It sounds scary, I know, but today’s blog is looking at what’s really going on this fall.
The most important takeaway we need to hold onto is this: while we are seeing an uptick in the number of folks struggling to pay their mortgages, we’re starting from a historically very low place. It’s a rise, not a spike, which is mildly comforting. The national mortgage delinquency rate—that’s people who are seriously behind on their payments (90 days or more)—was only 0.22% in the second quarter of 2025, according to the Canadian Mortgage Housing Corporation[1]. That might sound like a statistic on a page, but put it this way: out of every 1,000 mortgages, only about 2 are in serious trouble. Yes, that is higher than the record-low of 0.14% that we saw during the pandemic, but it’s still well below the 0.38% peak that we hit back in 2012. The Canadian Bankers Association echoes this reality, reporting that as of July 2025, over 99% of mortgage holders with a Canadian bank are not seriously delinquent[2]. This tells us the overarching system remains fundamentally strong, so we don’t need to panic and assume a collapse is imminent. However, it does highlight areas of growing concern, which we can’t afford to ignore.
The main source of worry in the market right now isn’t about today’s payment; it’s about the payment lurking right around the corner. We’re facing a massive wave of “renewal shock”: a huge number of mortgages are set to renew in 2025 and 2026—we’re talking about roughly 60% of all outstanding mortgages in Canada[3]! Many of these were five-year fixed-rate mortgages secured between 2020 and 2021 when interest rates were incredibly low, often around 2% or less. Now, as they renew, they’re looking at rates that are dramatically higher, typically in the 4% to 5% range. For a lot of families, especially those with a five-year fixed mortgage, that increase could be a gut punch of 15% to 20% higher than their current payments. That is where many people’s concern lies for the future and time will be the great tell on how those folks manage.
It’s important to be realistic that this stress isn’t distributed evenly across the country. As we’ve seen time and again, our beautiful British Columbia and ever-popular Ontario, with their high housing prices, are seeing some of the sharpest increases in financial distress. As of the second quarter of 2025, BC’s mortgage delinquency rate was 0.19%[4], which is actually below Ontario’s 0.27%. But make no mistake, both provinces are the primary drivers behind the national rise in missed mortgage payments and it all links back to the high cost of living and the fact that personal finances were already stretched thin, making that looming payment increase at renewal much, much harder to handle.
However, I think it’s important to note that a mortgage isn’t the only stressor. For many Canadians, particularly younger folks, the first warning sign of trouble actually comes from other debts. Equifax Canada has highlighted that missed payments on non-mortgage debts—things like car loans or credit cards—have reached levels not seen since 2009, which is the canary in the coal mine, if you ask me. Families who are already juggling late credit card or car payments are in a much weaker position to absorb a significantly higher mortgage bill when it’s time to renew their largest asset.
So, with that rather dreary overarching picture painted in fifty shades of grey, where do we go from here? We look for signs of hope because signs of doom are more than a plenty.
The Bank of Canada has thankfully started cutting its key interest rate (it dropped to 2.5% in September 2025), and more cuts are anticipated later this year (fingers crossed). This is good news, as it helps to lower the overall cost of borrowing, easing pressure on those with variable-rate mortgages or people who haven’t renewed yet. On the home price front, prices in BC are expected to decline modestly this year, which offers some much-needed relief to buyers, though affordability remains a huge hurdle, no one is denying that beast.
Ultimately, most of the experts I follow agree that, while more people are certainly struggling, the overall financial system and Canadian banks are equipped to manage the current level of defaults. The real estate market is facing a significant challenge, driven mainly by this wave of renewals and while it will be awful for those who can’t make ends meet, that nature of the real estate jungle says that there will be some good deals to be had by those that can afford to buy real estate that others cannot hang on to. I hope that through education and proactive measures, that folks might avoid the default path altogether, but inevitably there will be some who can’t help but steer down that road. I aim to hold onto the realistic hope that most homeowners are still managing their payments, and the situation, while requiring attention, is far from a historical crisis level. We’ll get through this, one renewal and one payment at a time and of course, if ever you have any questions, please feel free to reach out and ask.
If I don’t have the answers, I know amazing financial advisors and mortgage brokers who can work hard for you to get you the best strategy and renewal options out there, respectively.
[1] https://www.bnnbloomberg.ca/business/real-estate/2025/10/07/rising-number-of-canadians-cant-afford-mortgage-says-cmhc/
[2] https://cba.ca/article/mortgages-in-arrears
[3] https://www.bankofcanada.ca/2025/07/staff-analytical-note-2025-21/
[4] https://assets.equifax.com/marketing/canada/assets/reports_white_papers/eq-consumer-trends-report-2025-q2-en.pdf
