Canada's Housing Market: A Tale of Two Mortgage Crises

On the surface, the Canadian housing market seems to be holding steady. A recent report from the Canada Mortgage and Housing Corporation (CMHC) showed the national mortgage delinquency rate—the percentage of people over 90 days late on payments—actually fell in Q2 2025. A collective sigh of relief was heard across the nation.

But relying on that single statistic is like judging a movie by its poster. It tells a dangerously incomplete story. While some regions are doing just fine, Canada’s two most expensive provinces, Ontario and British Columbia, are showing serious signs of mortgage stress. Homeowners there are falling behind on payments at an alarming pace, creating pockets of financial strain that the national average conveniently masks.

This isn’t just a statistical blip; it’s a warning sign. So, let’s look beyond the headlines and unpack the real story of Canada’s divided housing market.

|The National Picture: Calm Waters, For Now

Let’s start with the good news that eased everyone’s concerns. The national mortgage delinquency rate in Canada dipped to a low 0.22%. While slightly up from last year’s record low, this figure suggests widespread stability. Who can we thank for this apparent calm? Mostly, the Prairie provinces, Quebec, and Atlantic Canada.

With more affordable home prices, their mortgage balances are manageable. Stable employment and smaller payment increases at renewal are keeping the country’s overall numbers looking healthy. But judging the entire Canadian housing market on this average is a mistake, because a storm is brewing in Ontario and BC.

|Ontario and BC: A Different Story Unfolds

When you zoom in on the Ontario housing market and the BC housing market, the picture changes dramatically. According to the same CMHC report, Ontario’s delinquency rate surged to 0.23%, a staggering 44% increase from the previous year. For the first time since 2012, Ontario is now pulling the national average down.

Toronto is at the epicentre, with its delinquency rate soaring by 60% year-over-year—a level not seen in over a decade. British Columbia is facing similar pressure, with its rate climbing 19% to 0.19%. So, what’s causing this regional crisis? It’s a combination of three key factors.

1. The Weight of Enormous Mortgages

It’s no secret that homes in Ontario and BC are incredibly expensive. This leads to two major problems:

• Massive Loan Balances: A payment increase on a $700,000 mortgage in the GTA feels vastly different from one on a $350,000 loan in Halifax. One is an adjustment; the other is a financial emergency.
• High Sensitivity to Rate Hikes: With such large loans, even a minor interest rate hike in Canada has a significant impact, pushing already tight budgets to the breaking point.

2. The Mortgage Renewal Cliff Has Arrived

Between 2020 and 2022, millions of Canadians secured mortgages with ultra-low interest rates. Now, the bill is coming due. We are currently in the midst of the “mortgage renewal cliff.” A homeowner with a 2.0% fixed rate on a $600,000 mortgage paid about $2,540 monthly. Renewing that same mortgage at 4.5% pushes the payment to over $3,300—an extra $800 every month. This payment shock is hitting homeowners in Ontario and BC the hardest, as they took on the most debt during the pandemic boom.

3. The Rising Cost of Everything Else

The final factor is widespread inflation. The cost of groceries, gas, and childcare has skyrocketed, eroding any financial cushion households in Toronto and Vancouver might have had. When their single largest expense—their mortgage—suddenly jumps by hundreds of dollars, there’s often no room left to cut back. This is how families who were once managing find themselves facing serious financial trouble.

|How to Prepare for Your Mortgage Renewal

If your mortgage renewal is on the horizon, especially in Ontario or BC, it’s time to act.

• Contact Your Broker Early: Reach out to your mortgage professional four to six months before your renewal date to explore all your options.
• Calculate Your New Payment: Use an online mortgage calculator to understand what your new payment will be. Knowing the numbers now allows you to start adjusting your budget.
• Ask About Extended Amortization: Inquiring about extending your loan’s amortization period could lower your monthly payments, providing short-term relief to help you stay afloat.

|The Challenge Continues into 2026

If mortgage renewal 2025 feels intense, prepare for the next wave. Another 1.15 million mortgages are up for renewal in 2026, with a large portion concentrated in Ontario and BC. The key factors that will determine the outcome are interest rates and the job market. As long as employment remains stable, most homeowners will find a way to manage. However, if unemployment begins to rise, this period of mortgage stress could evolve into a more significant crisis.

The Takeaway: Averages Can Be Deceiving

The narrative of a stable Canadian housing market is misleading. The reality for homeowners in Vancouver and Toronto is one of rising financial pressure and difficult choices. Canada’s mortgage story is not one of uniform stability but a tale of two very different experiences. For those facing the storm, proactive planning is essential. For everyone else, it’s a critical reminder that the real story is always found beyond the headline.