One of the clearest indicators of housing market stress is the share of borrowers who miss mortgage payments. In Canada, this is measured by the mortgage arrears rate, the percentage of mortgages that are 90 days or more past due.
The metric is closely watched because rising arrears often signal broader financial strain. One of the earliest warning signs of the 2008 financial crisis in the United States was a surge in homeowners who fell behind on mortgage payments.
By this measure, Canada’s housing market currently shows no sign of widespread distress. The mortgage arrears rate in Canada is close to 0.22 per cent, meaning roughly one in every 450 mortgage holders is more than three months behind on payments. The figures are based on the latest data from the Canada Mortgage and Housing Corp., although these statistics are reported with a lag of several months.
This resilience has surprised some observers, given that current mortgage rates are now higher than at any point between 2009 and 2022.
Two structural factors help explain the low arrears rate. First, Canada’s banking regulations, particularly the mortgage stress test, require borrowers to qualify at higher interest rates than those on their loans, making the system more resilient to rate increases.
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Second, mortgage default carries significant consequences. Canadian mortgages are generally full-recourse, meaning lenders can pursue borrowers’ other assets if the proceeds from a foreclosure sale do not fully cover the loan.
This differs from several U.S. states during the 2008 housing crash, where lenders in some cases could not pursue borrowers’ other assets, allowing homeowners to walk away from underwater mortgages.
Behind the calm national average, provincial trends show a more mixed picture. Housing markets vary significantly across Canada. While British Columbia and Ontario saw price declines in 2025, most other provinces recorded price growth.
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Alberta’s mortgage arrears have fallen in recent years, whereas Ontario’s arrears rate has gradually increased over the past three years. In Quebec and B.C., arrears have edged up slightly but remain broadly stable.
Ontario appears to be experiencing somewhat greater pressure. As of September, 2025, the most recent data available, the province’s mortgage arrears rate reached 0.24 per cent, the highest level in about a decade. The figure is likely higher today, given the further decline in home prices since September and the province’s weak economic growth. When prices fall, homeowners have less equity, reducing their ability to refinance or sell if financial difficulties arise.
Still, Canada’s housing market appears more resilient than many analysts expected. While markets in provinces such as Ontario and B.C. may remain sluggish in 2026, low mortgage arrears suggest the risk of broad financial distress or forced selling is very limited, making a sharp nationwide decline in home prices very unlikely.
Hanif Bayat, PhD, is the CEO and founder of WOWA.ca, a Canadian personal finance platform.
