Canada Mortgage Market Update: Delinquency Trends, Housing Starts and Household Debt

Canada’s mortgage market is navigating a period of mixed signals. Recent data show a national decrease in mortgage delinquencies, a surge in housing starts in November, and a rise in household debt relative to income. Together, these indicators highlight an evolving housing finance landscape, one marked by structural disparities, regional variation, and implications for borrowers, lenders, and policymakers.

National delinquency trends and regional stress

In the second quarter of 2025, the national mortgage delinquency rate fell to 0.22%, the first such decline in three years. However, the broader picture is more complex: Ontario and British Columbia bucked the national trend with climbing delinquency rates, particularly in Toronto where the rate jumped sharply. These regional divergences point to persistent financial stress among homeowners in high‑cost markets, especially as many face renewals at higher rates compared with the historically low rates seen earlier in the decade.

For lenders and brokers, this means risk assessment cannot rely solely on national averages. Instead, local market indicators and client‑specific debt profiles must guide underwriting, renewals, and product recommendations.

Housing starts: monthly gains amidst long‑term caution

In November 2025, housing starts across Canada increased by 9.4% to 254,058 units on a seasonally adjusted annualized basis. This reflects tighter construction activity than in October and suggests that homebuilding remains resilient in certain regions, notably Quebec and the Atlantic and Prairie provinces. However, the six‑month trend and year‑over‑year actual starts in larger urban centres have not kept pace, particularly in Ontario and British Columbia.

This duality, short‑term momentum versus longer‑term slowing patterns, underscores the uneven supply environment. For prospective buyers, a rise in starts could signal improved options in select regions; for builders and developers, the data reinforce the challenge of balancing supply constraints with demand pressures in diverse markets.

Household debt climbs relative to income

Recent Statistics Canada figures show that the household debt‑to‑income ratio climbed to 174.8% in Q3 2025, meaning Canadian households owe nearly $1.75 for every dollar of disposable income. Mortgage balances remain a major component of this debt load, even as borrowers benefit from lower policy rates compared with earlier in the cycle.

Rising debt levels elevate the importance of sustainable lending practices and prudent financial planning. For consumers, this emphasizes the need for robust affordability assessments, especially as economic conditions and interest rate expectations evolve.

What this means for stakeholders

Borrowers:

• Evaluate renewal timing early and consider locking in terms that balance certainty and flexibility.

• Assess personal debt loads in the context of broader financial goals and stress‑test budgets under different rate scenarios.

Lenders and brokers:

• Incorporate regional risk insights into underwriting models and client recommendations.

• Monitor housing starts data as a signal of supply conditions and future demand in key markets.

Policymakers:

• Support targeted measures that address regional affordability challenges without creating broad market distortions.

• Encourage transparency in local supply and debt metrics to inform both mortgage professionals and consumers.

Conclusion

Canada’s mortgage market is showing signs of stabilization, but it remains defined by regional complexity and evolving risk factors. National delinquency improvements, increased housing starts, and rising household debt all point to a market in transition. For industry participants and homeowners alike, granular insight and disciplined planning will be essential in navigating the months ahead.