Ontario mortgage arrears expected to rise through mid-2027: CMHC

Ontario’s mortgage arrears rate is expected to continue rising through mid-2027 as weaker housing conditions and labour market uncertainty leave some borrowers with fewer options to manage financial difficulties, according to Canada Mortgage and Housing Corporation.

The province’s arrears rate reached 0.32% in the second quarter of 2026, up from 0.21% a year earlier. Although the rate remains below historical peaks, CMHC’s latest Residential Mortgage Industry Report says Ontario is expected to see the largest and most sustained increase in arrears through mid-2027.

Pressure is concentrated in the Greater Toronto and Hamilton Area (GTHA) and southwestern Ontario, where trade tensions are affecting manufacturing industries, including the automotive sector. Softer resale conditions can also make it harder for financially stretched borrowers to sell or refinance, the agency says.

A mortgage is considered in arrears when payments are 90 days or more past due.

“Canada is not facing a broad mortgage crisis,” said Aled ab Iorwerth, CMHC’s deputy chief economist. “Financial pressure is becoming more concentrated in specific regions of the country and is appearing first in other debts, before mortgages.”

CMHC also expects a more moderate rise in arrears in British Columbia and Atlantic Canada through mid-2027. In Alberta and Saskatchewan, where arrears have declined amid stronger economic conditions and higher energy prices, rates are expected to remain stable.

Private lenders show sharper pressure

The report identifies mortgage investment entities (MIEs) as the lender group showing the sharpest rise in arrears. These include mortgage investment corporations and other private entities that often provide financing to borrowers who don’t qualify with traditional lenders.

Nationally, the share of MIE mortgages at least 90 days past due rose to 2.57% in the second quarter, up from 1.83% a year earlier. The comparable rate for chartered banks was 0.28%.

In the GTHA, 11.1% of MIE mortgage balances were at least 90 days past due in the first quarter of 2026, up from 3.0% in the third quarter of 2023.

CMHC says the increase may reflect delinquent loans remaining unresolved for longer. It points to a combination of interest-only lending, thinner borrower equity and higher debt burdens in the region.

MIEs accounted for 1.8% of total outstanding mortgage balances across Canada in the first quarter, according to the agency.

Renewal pressure eases, but risks remain

CMHC says the largest mortgage renewal shock has likely passed, although some borrowers will still face higher payments. Those renewing five-year mortgages taken out in 2021 and, to a lesser extent, 2022 remain particularly exposed.

If interest rates and other market conditions remain broadly unchanged, more borrowers could renew at rates similar to or below their existing rates, reducing renewal-related pressure over the next few years, the report says.

The agency is also watching rising delinquencies on auto loans, credit cards and lines of credit, which it says can signal household stress before it appears more fully in mortgage arrears.

“The mortgage system is adjusting, but these early warning signs, particularly in parts of Ontario, need to be monitored closely,” ab Iorwerth said.