Ontario is expected to see the country's largest and most sustained increase in mortgage arrears through mid-2027, with trade tensions, labour-market uncertainty and weaker housing conditions contributing to financial pressures in parts of the province, according to the Canada Mortgage and Housing Corp.
The province's mortgage arrears rate reached 0.32 per cent in the second quarter of 2026, remaining below historical peaks but projected to rise further, CMHC said in its latest Residential Mortgage Industry Report.
Ontario faces mounting mortgage pressure
The expected increase is concentrated in the Greater Toronto and Hamilton Area and Southwestern Ontario, where trade tensions are affecting key manufacturing sectors, including the automotive industry. Those pressures are contributing to uncertainty in the labour market alongside softer housing market conditions, the report said.
British Columbia and Atlantic Canada are also expected to experience increases in mortgage arrears through mid-2027, although the projected rises are more moderate than in Ontario. By contrast, arrears have declined in Alberta and Saskatchewan amid stronger economic conditions and higher energy prices, with rates in both provinces expected to remain stable over the same period.
The regional differences suggest that mortgage payment difficulties are not affecting households uniformly across the country, with the most pronounced pressures expected in specific parts of Ontario.
A mortgage is considered in arrears when payments are 90 days or more past due.
Other household debts provide warning signs
CMHC said rising delinquencies on auto loans, credit cards and lines of credit could indicate growing household financial stress before it becomes more evident in mortgage arrears. The trend highlights the importance of monitoring other forms of consumer debt when assessing borrowers' ability to meet their mortgage obligations.
At the same time, the report points to several factors suggesting that risks within the mortgage market remain contained. The largest wave of mortgage renewals and its associated payment shock has likely passed, while new mortgage lending is showing a lower risk profile.
Banks' provisions for potential losses also remain low relative to their mortgage portfolios, according to CMHC.
The combination of rising arrears in some regions and comparatively low indicators of mortgage portfolio risk suggests that financial pressure is becoming more concentrated geographically rather than developing into a nationwide mortgage crisis.
CMHC says regional risks warrant monitoring
Aled ab Iorwerth, CMHC's deputy chief economist, said the pressures are emerging first in other forms of household debt and are concentrated in particular regions, rather than indicating a broad deterioration across Canada's mortgage market.
"Canada is not facing a broad mortgage crisis. Financial pressure is becoming more concentrated in specific regions of the country and is appearing first in other debts, before mortgages. The mortgage system is adjusting, but these early warning signs, particularly in parts of Ontario, need to be monitored closely."
The report's outlook extends through mid-2027, with Ontario expected to experience the most persistent increase in arrears, while Alberta and Saskatchewan are forecast to remain stable. British Columbia and Atlantic Canada are projected to see more moderate increases.
CMHC's Residential Mortgage Industry Report provides further details on mortgage market conditions and the risks facing borrowers and lenders. The full report is available through the corporation's website.