In its Q2 2025 Consumer Credit Trends call, Equifax said Canada’s economy is showing strain as growth slows and households face higher living costs.
“GDP saw a noticeable decline in the second quarter, both overall and on a per-capita basis,” said Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada. “There are a lot of challenges in terms of trading conditions across Canada.”
Domestic demand has cushioned the macroeconomic outlook, with government spending and consumer outlays helping to prevent a deeper downturn, Oakes said.
However, the labour market is weakening, with over 60,000 jobs shed in August and unemployment rising to 7.1%, according to Statistics Canada.
“A rise in unemployment is a shock factor in terms of credit measures, such as payment behaviours,” Oakes said, pointing to the fact that rising unemployment will directly influence many households’ ability to meet higher mortgage payments.
On the credit side, Oakes noted that overall consumer debt is up about 3% year-over-year, though growth has slowed amid weaker population gains and tighter credit use.
Equifax also pointed to a growing divide between consumers with and without mortgages: debt kept rising for non-mortgage holders in Q2, while mortgage holders kept increases more contained.
Renewals, not new lending, driving mortgage activity
Equifax said Canada’s total mortgage balance is about $1.9 trillion, up 2.4% year-over-year, with the average balance at $247,000.
The firm noted that even with lower rates and slight price drops, first-time buyers continue to sit on the sidelines in anticipation of improved affordability.
Even so, first-time buyer activity edged up 1.8% compared to last year, though participation fell in Ontario, B.C. and Alberta. Those entering the market are borrowing more, with the average first-time loan amount up 4% year-over-year to nearly $430,000.
“Mortgage growth remains sluggish, and overall a recovery has not yet materialized,” said Swarnima Pandey, Analytics Insights Manager at Equifax Canada.
Instead, renewals have become the main driver of mortgage activity through the second quarter of 2025. Equifax data show renewals and refinancings surged 27% year-over-year, with new mortgage originations up 15.3% largely on the back of this renewal wave.
Pandey noted that in several markets, the bulk of renewals are resulting in payment shocks as borrowers leave ultra-low pandemic rates for mortgages that add hundreds to monthly costs.
While mortgage holders have largely kept other credit use in check, renewals are testing household budgets in ways not seen in more than a decade.
“Today most renewals are in payment shock,” said Pandey. “Borrowers are renewing at much higher rates than their original loans, especially for those who secured fixed rates during the pandemic.”
Risks concentrated in key markets
For lenders, Equifax stressed that the impact of renewals varies widely by region.
Delinquencies are concentrated in the provinces where home prices surged most during the pandemic, especially Ontario and British Columbia. Average loan values there are about 20% above the national average, leaving mortgage holders more exposed to rising rates.
Equifax reported Ontario’s 90+ day mortgage delinquency rate reached 0.27% in Q2, while B.C.’s was 0.19% — both higher than last year. By comparison, most other provinces remain below pre-pandemic delinquency levels, highlighting how risks are concentrated in the high-value markets.
“High-value mortgages are the main culprit,” Pandey explained. “The Canadian market overall looks steady, but the real risk is concentrated in the high-value markets that ran hottest during the pandemic.”
Kathy Catsiliras, Vice-President of Analytical Consulting at Equifax, added that the slowdown in sales is compounding the issue. “The lack of sales activity in Ontario and B.C. has had a significant impact on overall mortgage lending,” she said. With resale activity subdued, the market remains effectively on hold, awaiting either rate relief or an improvement in affordability.
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Last modified: September 10, 2025