Mortgage arrears are rising from a low base, and two new reports say the first strain showed up elsewhere

Canada’s housing agency and one of its largest banks have each published a view of household credit in the past week, and they agree on the main point. Mortgage arrears are rising, but from a low starting level, and the first signs of stress appeared in other kinds of debt. The Canada Mortgage and Housing Corporation (CMHC) released its fall Residential Mortgage Industry Report on Oct. 27.¹ CIBC Capital Markets published its own analysis the same week.²

What the two reports say

A mortgage counts as being in arrears once it is three months or more behind. Canadian Mortgage Trends’ account of the report puts Ontario’s second-quarter 2026 rate at 0.32%, compared with 0.21% a year before. CMHC expects Ontario’s increase to be the biggest and longest-lasting through mid-2027, centred on the Toronto-Hamilton area and southwestern Ontario.³ Its deputy chief economist, Aled ab Iorwerth, said that “Canada is not facing a broad mortgage crisis.”³

CIBC economists Benjamin Tal and Katherine Judge reach a similar conclusion. They estimate that mortgages making up about 5% to 6% of the total saw payment increases above 40% in 2026, and that the cost of refinancing will not ease significantly until February 2027. They also found that total household credit is expanding at roughly 4% a year, among the weakest rates on record apart from the pandemic years, and wrote that the credit quality of households is “surprising on the upside.”⁴

Both reports point to the same sequence. Households under strain tend to fall behind on credit cards, lines of credit and car loans before they miss a mortgage payment, so those debts act as an early signal.³⁴

The long view from insolvency filings

The Office of the Superintendent of Bankruptcy (OSB) keeps the longest public record of formal debt trouble, and our Canadian insolvency statistics tracker draws on it. The annual totals show how much the mix has changed.⁵

Filings in 2025 were about 2.4% above 2019 and well below 2009. For the 12 months to August 2026 the total reached 146,135, as we reported in our look at the August data.⁵ A rise from a low base is not the same as a crisis, and the CIBC authors make that point about the insolvency rate. The data also cannot tell us which households are next. For the wider picture of who is strained and who is not, see our earlier look at concentrated household debt.

Rates are a separate pressure

The Bank of Canada raised its policy rate by 25 basis points to 2.5% on Oct. 28.⁶ Reuters reported it was the first increase in more than three years, and that the Bank said more might be needed if energy prices keep feeding into other prices.⁷ A higher policy rate does not change the payment on a fixed-rate mortgage until renewal. It does raise the cost of variable-rate mortgages and of lines of credit tied to prime, so the pressure can ease on one side while building on the other.

What this means for you

If your mortgage is up for renewal, the Financial Consumer Agency of Canada (FCAC) says it expects federally regulated banks to contact customers at risk of default and to offer tailored relief. It also warns that extending your amortization to lower payments can add thousands or tens of thousands of dollars in interest.⁸ Contacting your lender early is the first step the agency suggests.

If credit cards or lines of credit are what is slipping, a consumer proposal or bankruptcy deals with unsecured debts like these. The OSB notes that the legal protection that follows a filing usually does not stop collection of secured debts such as a mortgage.⁹ Harris & Partners describes options for dealing with credit card debt, and our guide to consumer proposals covers how that route works. Each option has trade-offs, including effects on your credit record, so it is worth speaking to a Licensed Insolvency Trustee before choosing. The OSB notes that trustees typically do not charge for a first consultation.¹⁰ For a related look at renewals, see what to do if you cannot afford your renewal payment.