Ontario mortgage delinquencies on the rise and could climb higher still, experts warn

A real estate sign is displayed in front of a house in Toronto in this file photo. THE CANADIAN PRESS/Evan Buhler

Mortgage delinquencies appear to be on the rise in both Ontario and the Greater Toronto Area and the numbers could get worse as Canada navigates choppy economic waters, experts say.

According to data prepared for the Canada Mortgage and Housing Corporation (CMHC) by Equifax Canada, mortgage delinquencies rose to 0.22 per cent in Ontario for the first quarter of this year. That’s up from 0.15 per cent in the first quarter of 2024 and 0.09 per cent in the first quarter of 2023.

In Toronto, the mortgage delinquency rate hit 0.23 per cent for the first quarter of 2025. That compares to 0.14 per cent for the first quarter of 2024 and 0.08 per cent for the first quarter of 2023.

Specifically, the data tracks the volume of 90-day mortgage delinquencies, which include defaults, but can also refer to late payments.

While the rate might not be terribly bad by historical standards, mortgage delinquencies haven’t been that high in Toronto since early 2013 and Ontario hasn’t seen levels this high since 2016.

Equifax reported in February that more than 11,000 mortgages in Ontario recorded a missed payment in the last quarter of 2024. The firm warned that Ontarians are struggling with their mortgages and that mortgage holders are struggling with other forms of debt as well.

“It’s concerning,” says Maria Solovieva, an economist at TD Bank.

Interest rates, uncertainty are factors

Experts say there are two main reasons why mortgage delinquencies are on the rise now.

First, the province is seeing a wave of mortgage renewals by people who bought homes with rock-bottom borrowing costs during the pandemic and are now having to renew at higher rates. But in addition to low interest rates, people also had forced savings during lockdown, Solovieva points out.

“So they had these extra funds available for them to put towards repayment,” she says.

In that sense, it was predictable that some people might have difficulty making their payments now.

“There’s definitely a rise in (delinquencies) associated with coming back to normalcy,” Solovieva says.

Jordan Nanowski, CMHC’s lead economist for the Greater Toronto Area, agrees.

“I think a rise in delinquencies is expected given that there’s a lot of mortgage renewals taking place, so (that) reflects higher mortgage costs,” Nanowski says.

The second thing driving up delinquencies, he says, is economic uncertainty finding its way into the labour market.

“There’s a lot of economic uncertainty that in itself is already manifesting certain negative impacts,” Nanowski says. “Especially in certain industries, we’re seeing some job cuts and that could be contributing as well. So it’s kind of a confluence of the two.”

While the data is not clear on this point, Nanowski says the softening of the condo market could well be playing a role in delinquencies if people looking to offload those properties find they are unable to get their money out because of the weaker market.

“There definitely could be individuals that are, let’s say, a little bit more tied to their property and if they have issues making payments and they’re looking to sell, it’s not that easy to sell,” he says. “So in that type of environment, they might be more likely to be in arrears for longer. So market dynamics are definitely playing a factor there.”

Ontario vulnerable as trade war remains unresolved

Both Solovieva and Nanowski agree that going forward, Ontario could be in for a rough ride if the ongoing trade war with the United States, sparked by U.S. President Donald Trump’s tariff threats, hits the job market.

“We do expect that Ontario specifically will be hit by the trade war a little bit more,” Solovieva says. “The unemployment rate is already at 7.9 and 7.8 per cent between the two months in May and in June (respectively), so it’s larger than average in Canada.”

Nationally, unemployment sat at 6.9 per cent in June.

“The economic uncertainty and impacts of potential tariffs could impact employment for a lot of individuals, and that could increase mortgage arrears,” Nanowski says.

He points out areas that support industries targeted by the U.S. for tariffs are particularly vulnerable.

“Windsor is probably the most exposed. Same with case Kitchener, Cambridge, Waterloo, St. Catharines, Niagara, Hamilton for steel,” Nanowski says. “Those are places that mortgage arears might pop up a bit higher if trade tensions and economic uncertainty persist, right? And we’re already seeing a bit of impact there. You’re seeing some job losses in certain sectors that are more unique to that area.”

CMHC could not provide the real number of mortgage delinquencies in Ontario. However, of the nearly 7 million outstanding mortgages in Canada, 0.22 per cent were in arrears in the fourth quarter of last year, according to the corporation. That translates into 15,259 mortgages across the country.

Nanowski adds that while the diversified labour market within the Greater Toronto Area is something of a bulwark around Toronto, the GTA is still vulnerable in some places, such as Oshawa, where thousands of jobs are tied to the auto industry.

But while there’s reason for concern, Solovieva points out that for the time being, mortgage delinquencies still sit at less than a quarter of a percent.

“So it just tells you that, yes, there is strain, especially in those very not affordable regions,” she says. “But it’s not something that will basically, at this point, be a breaking point.”

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