The economic volatility of the past three years has been particularly tough to navigate for younger consumers, who typically have lower incomes and less savings.Nuthawut Somsuk/iStockPhoto / Getty Images
A number of red lights are flashing across the dashboard of Canada’s consumer credit market, according to an analysis released Tuesday by Equifax.
On everything from credit cards to mortgages, a growing share of borrowers is increasingly struggling to make their monthly debt payments, the numbers suggest. The report, which records data from the first three months of 2025, offers a gauge of the financial health of Canadian borrowers amid sputtering economic growth, rising unemployment and stubborn inflation.
Signs of strain are particularly acute among young people and those living in Ontario, with missed payments rising even as many consumers are cutting back on spending, the data suggest.
Excluding mortgages, the severe delinquency rate – the proportion of the total debt balance on which consumers have missed payments for 90 days or more – has reached 1.6 per cent. That is its highest level since 2010 when Canada was reeling from the effects of the global financial crisis, said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.
“That is not yet showing signs of levelling off to any degree. So that’s where we are particularly concerned,” she added.
Mortgage rates are battling a weak economy and persistent inflation, and inflation may be winning
Delinquencies are rising even as Canadians are dialling back their credit card use. Average monthly spending per credit card holder in the first three months of the year was the lowest it has been since March of 2022, according to the report.
But consumers are also paying off a smaller share of their monthly credit card bills than they used to. The shift has been especially dramatic among those under 35, who are now paying just under $59 of every $100 on their credit card balance, down from nearly $63 a year ago.
The economic volatility of the past three years, which have seen inflation accelerate, interest rates go up and, more recently, jobless numbers creep up, has been particularly tough to navigate for younger consumers, who typically have lower incomes and less savings, said Ms. Oakes.
The unemployment rate among 15- to 24-year-olds was around 14 per cent in April, around twice the overall jobless rate of 6.9 per cent, according to Statistics Canada.
A shaky labour market may also help to explain why Ontario has emerged as what the report dubbed “a hotspot for financial stress in Canada.”
For young Canadians, the toughest job market in decades is threatening their financial futures
Even before U.S. tariffs began hitting employment in Ontario’s manufacturing sector in April, the province already had the highest jobless rate in Canada, along with Prince Edward Island.
Ontario is also at the forefront of Canada’s current wave of mortgage renewals, a treacherous moment for many financially overstretched borrowers.
Scores of homeowners who bought properties in the pandemic housing boom are now facing loan renewals at higher interest rates, which is sending some households over their financial tipping point, Ms. Oakes said.
For mortgage debt in Ontario, the severe delinquency rate rose to 0.24 per cent in the first quarter of the year, a hefty 72-per-cent increase since the same period in 2024, the data show.
Across Canada, mortgage delinquency levels have risen to the highest they’ve been since the period around 2016 and 2017, shortly before Ottawa introduced mortgage stress tests, a stricter way of vetting mortgage applicants’ finances to prevent overborrowing.
Those rules caused the number of missed mortgage payments to drop and remain lower for years, Ms. Oakes said. But now mortgage delinquencies have crept back up even with the stress test in place, she noted.
