BMO mortgage delinquencies climb as portfolio growth resumes

Delinquencies in Bank of Montreal’s Canadian mortgage portfolio continued to rise in the third quarter, although losses remained low and the bank reported signs of stabilization elsewhere in its consumer loan book.

The share of residential mortgages at least 90 days past due reached 0.56% as of July 31, up from 0.51% in the previous quarter and 0.37% a year earlier, according to BMO’s third-quarter financial presentation.

Provisions for credit losses on impaired residential mortgages also increased to an annualized 0.07% of the portfolio, compared with 0.06% in the second quarter and 0.03% a year ago.

The deterioration came as BMO’s Canadian residential mortgage portfolio grew to $164.2 billion, up from $162.1 billion in the previous quarter and $161.8 billion a year earlier.

The bank’s home equity line of credit portfolio increased more quickly, rising 6% year over year to $54.6 billion. HELOCs accounted for roughly one-quarter of BMO’s broader $218.8-billion Canadian residential-secured lending portfolio.

Mortgage losses remain low

Despite the increase in arrears, BMO reported a trailing four-quarter loss rate of just three basis points across its residential-secured lending portfolio.

The bank said 1% of residential-secured balances were both uninsured and held by borrowers with credit scores below 650 and loan-to-value ratios above 75%.

However, some measures of borrower leverage have moved higher over the past year. The average current loan-to-value ratio on BMO’s uninsured mortgage portfolio rose to 63%, from 59% in the third quarter of 2025.

The insured share of the portfolio declined to 24% from 26% over the same period.

BMO said its broader Canadian consumer portfolio was performing in line with expectations amid elevated unemployment and consumer insolvencies. The bank’s chief risk officer, Piyush Agrawal, told analysts that consumer insolvencies remain high, but that BMO is beginning to see “some signs of stabilization” following efforts to reduce risk.

Those improvements were more evident in unsecured lending than in mortgages. Canadian personal and commercial banking recorded $447 million in impaired provisions during the quarter, down $30 million from the previous quarter, primarily due to lower losses in unsecured retail portfolios.

Near-term renewal exposure declines

BMO said 22% of its mortgage balances are scheduled to renew over the next 12 months, down from 26% at the same point last year.

Borrowers in the near-term renewal group had an average credit score of 787 and an average uninsured loan-to-value ratio of 64%.

The bank characterized renewal risk as low, citing borrower equity and proactive outreach. Nearly half of the mortgages renewed during the third quarter resulted in a lower monthly payment, reflecting the decline in borrowing rates from their previous peaks.

About 63% of BMO’s mortgage portfolio had an effective remaining amortization of 25 years or less, down slightly from 64% a year earlier. Fixed-rate loans accounted for 57% of balances, while variable-rate mortgages represented 43%.

Bank monitors tariff risks

BMO recorded total provisions for credit losses of $722 million in the third quarter, down from $739 million in the previous quarter and $797 million a year earlier.

Provisions on impaired loans fell to $708 million, their lowest level in 10 quarters, while provisions on performing loans totalled $14 million.

Agrawal said the bank is monitoring the potential effects of new tariffs on Canadian economic growth, employment and business investment, but does not currently view the dispute as a broad credit event.

“The bigger variable for us continues to be broader macroeconomic implications for Canada,” he told analysts.

BMO reported adjusted net income of $2.86 billion, up 19% year over year, while adjusted earnings rose 22% to $3.96 per share. Canadian personal and commercial banking contributed $983 million in adjusted earnings, an increase of 15%.