Opinion: Canada’s mortgage delinquencies creeping up

The Canadian economy continues to face headwinds from uncertainty in trade with the U.S., disruptions to energy supplies and global supply chains.

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Countries don’t typically get report cards, but there are hard facts that can be collated, assessed and compared. Enter Benchmark Canada, a new project from the Macdonald-Laurier Institute that brings together more than 40 different metrics that measure this nation’s performance. This fall, the National Post is examining many of those findings. 

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Despite rising uncertainty and economic disruptions, Canadian households have shown resilience in meeting their financial obligations. Mortgage delinquencies in Canada are the second-lowest among G7 countries, with 0.28 per cent of mortgages in arrears for over 90 days.

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Behind the lower delinquency rates, though, is an uncomfortable trend: Canada’s delinquency rate has doubled in just four years. A financially conservative lending culture, proactive governance by the Office of the Superintendent of Financial Institutions (OSFI), and responsible borrowers have kept the delinquency rate much lower than in the markets to the south, where the national rate averaged across the U.S. reached 1.43 per cent, five times higher than Canada’s.

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Canadian households’ financial resilience is reassuring. However, it should not lead to regulatory complacency. The Canadian economy continues to face headwinds from uncertainty in trade with the U.S., disruptions to energy supplies and global supply chains, and an out-of-balance flow of working-age immigrants. As Canada tries to reimagine its competitive advantage in trade and commerce, stable housing markets give governments and businesses room to chart a strategy for global competition.

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With almost five million outstanding residential mortgages in Canada in June 2026, only 14,021 mortgages were past due for three months or more. This number should be seen in the context of huge swings in mortgage rates that directly affected the cash flow of millions of households, whose mortgage payments jumped with the steep, sustained rise in rates starting in November 2022.

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Many market watchers expressed deep concern earlier when a huge wave of pandemic-era low-rate mortgages came up for renewal at much higher rates during 2025 and 2026. Almost 1.8 million mortgages were up for renewal, and many more in 2027. Still, mortgage delinquencies have remained remarkably low compared with the G7 economies, despite rates doubling over the past four years.

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Disciplined Canadian borrowers can take some credit for the stability of the mortgage debt market. Yet, the credit must go to the OSFI, the federal regulator, which instituted stress tests, first on insured mortgages and subsequently expanded to uninsured mortgages, that required borrowers to qualify at a rate almost two per cent higher than the negotiated rate with the lender, to ensure that the borrower can sustain sudden rate hikes.

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At the time OSFI introduced stress tests, first in 2016 and expanding them in 2018, many questioned the utility of these measures, especially when prairie housing markets were struggling with sales and prices. Raising the bar meant fewer households would qualify for mortgages, or they would qualify for lower amounts than desired. Almost 10 years later, and since the unpredictable swings in financial markets brought about by black swan events like tariffs, wars and a global pandemic, Canadian regulators’ foresight should be a source of comfort.