Canadian consumer debt increases to $2.6 trillion primarily on mortgages

A new home is shown for sale in a housing development in Ottawa on Tuesday, July 14, 2020. THE CANADIAN PRESS/Sean Kilpatrick

A credit reporting agency says consumer debt has spiked up as Canadians borrow more money.

According to TransUnion Canada, total consumer debt increased to $2.6 trillion in the third quarter of 2025 driven primarily by an increase in mortgage balances.

Mortgage balances rose 4.1 per cent to $1.89 trillion year-over-year.

Homeowners prioritize affordability with lower interest rates

The agency said mortgage originations (the process of drafting a loan) were up 18 per cent year-over-year as homeowners refinanced their mortgages or renewed earlier amid lower interest rates.

Many borrowers opted for shorter one or three-year fixed terms, where historically the five-year mortgage term has been the most popular choice. The shorter mortgage terms have driven turnover in the market, creating a spike in origination volumes.

“In today’s elevated interest rate environment, consumers are potentially tempted to opt for shorter-term mortgages to optimize for renewal at favorably lower rates,” said Matt Fabian, director of financial services research and consulting at TransUnion Canada in a news release.

The average new mortgage loan amount, primarily from homeowners in Toronto and Vancouver, increased 4.1 per cent year-over-year to $359,623 despite some easing in home prices.

Non-mortgage debt spikes up

The total non-mortgage debt increased 4.3 per cent to $673 billion year-over-year.

The average credit card balance per customer rose 1.9 per cent year-over-year to $4,652.

New credit card originations declined 8.6 per cent year-over-year as lenders maintained a cautious stance, the agency said. While originations were down, new card limits climbed to 4.8 per cent to over $6,500.

The average monthly credit card spend per consumer was down 3.4 per cent year-over-year to $1,373. The agency said it possibly shows a connection to declining optimism with consumers around the economy, amid rising unemployment and continued trade tension.

Auto loans were up to $30,396 in 2025 from $29,138 in 2024. Installment loans were up $23,398 this year from $22,534 last year. Line of credits were up $36,208 in 2025 from $34,854 in 2024.

Early-stage delinquency rates fall but late-stage delinquency rates up

Early-stage delinquency rates of 30 or more days past due date have declined to 4.38 per cent suggesting fewer consumers are missing payments.

Late-stage delinquency rates of 90 days past due however continued to rise to 1.77 per cent.

The agency said delinquency trends reveal a significant disparity between financially secure consumers and those experiencing financial hardships.

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Overall revolving balances (the portion of that total balance that is carried over from one month to the next and is subject to interest charges) remained flat from the previous year.

“Looking ahead, while rising unemployment and tariff-related pressures continue to pose challenges, early signs of stabilization in core economic indicators, particularly interest rates and inflation, are beginning to offer some relief to consumers,” said Fabian.