Canadian household credit defies renewal shock, CIBC finds
Consumer proposals, which typically cost lenders less than bankruptcies, made up 77% of filings in the third quarter, compared with 60% in 2019. Equifax data on Canada’s insolvency hotspots suggests that choice is deliberate.
“A lot of the insolvency rates that we’re seeing an increase in is really tied to homeowners that want to protect their assets but obviously have a mountain of non-mortgage debt, and they’re trying to find a way to formally reduce that through more structured payments so that they can stay afloat,” Kathy Catsiliras, Equifax Canada’s vice-president of analytics and consulting, told CMP.
CIBC expects renewal payment increases to ease notably from February 2027, with mortgage delinquencies likely to trend lower that year, depending on the job market.
Until then, the Bank of Canada’s first rate hike since 2023 adds pressure where households are already stretched, according to Joel Fox, chief operating officer of Ownright.
“For most people, the 25 basis points on its own isn’t a dramatic change by any means. On a $500,000 mortgage, it’s roughly $60 to $70 more a month, depending on the amortization. The problem is that it can really affect households that have already been struggling,” Fox said.
