Mortgage Arrears at a 12-Year High: What the Number Does and Doesn't Say

The numbers

Two pieces of data from the same release tell different stories, and it is worth holding both.

According to Better Dwelling's reading of Canadian Bankers Association (CBA) data for July, the number of mortgages in arrears at member banks rose 1.8% in the month to 14,270. That is 24.9% higher than a year earlier and, in Better Dwelling's words, a 12-year high.

Better Dwelling reports the national arrears share climbed one basis point to 0.29% in July, six basis points higher than a year earlier, the highest since early 2015. Since the count's record low of 7,274 in August 2022, it has risen 96.2%.

The same data shows the total number of mortgages at the banks fell 0.3% in the month to 4.91 million, and is down 4.0% from its peak. Better Dwelling calls it a six-year low, the lowest since October 2020.

Putting 0.29% in proportion

A near-doubling sounds alarming, and the direction is fair to note. But 14,270 out of 4.91 million works out to about 0.29%, which means more than 99.7% of bank mortgages in the data are not in arrears.

Better Dwelling also adds useful context of its own. It notes that part of the earlier decline in arrears was due to policies that let banks delay counting loans as in arrears, so the 96% climb from the 2022 low overstates the underlying swing somewhat. It also points out that 2014, the last time the share was consistently this high, was not remembered as a crisis period for real estate.

Why the count is rising

Better Dwelling links the trend to households stretched by large mortgages and the cost of living, and points to an earlier TransUnion warning that mortgage borrowers have been tapping credit to smooth their spending. Its read is that mortgage balances are growing while the number of accounts is falling, so households are accumulating debt rather than paying it down.

That fits with other data we have covered recently. Statistics Canada survey results showed a large share of mortgage holders reporting financial difficulty, discussed in our piece on the StatCan survey, and the Bank of Canada has published work on households running a budget deficit, covered in our article on that research. Arrears are what the strain looks like once it reaches the lender.

These are national figures for CBA member banks. They do not break out Ontario, and they do not include credit unions or alternative lenders, so they should not be read as a local reading of Waterloo Region or London.

If a payment is getting tight

The window for the easiest options is before a payment is missed, not after. A few practical steps:

• Talk to your lender early. Many lenders have hardship processes. What is available varies, and it is easier to discuss before a payment is late.
• Know your maturity date. A renewal is a natural point to restructure. Our 120-day renewal window explainer shows when your options open.
• Understand the consequences. Our article on what happens if you fall behind walks through the process in Ontario.
• Check what leaving early would cost. The Penalty Protector Pro page and its Break-or-Stay calculator help you weigh a mid-term change against the penalty.
• Run your own numbers. The calculators model payments on Canadian semi-annual compounding.

None of this is a forecast that any particular household will struggle. It is the reason a conversation before a problem is cheaper than one after.