{"id":253428,"date":"2025-11-01T00:36:09","date_gmt":"2025-11-01T00:36:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/253428\/"},"modified":"2025-11-01T00:36:09","modified_gmt":"2025-11-01T00:36:09","slug":"canadas-mortgage-arrears-are-now-growing-faster-than-the-90s","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/253428\/","title":{"rendered":"Canada\u2019s Mortgage Arrears Are Now Growing Faster Than The \u201990s"},"content":{"rendered":"

Canada\u2019s banks aren\u2019t worried about mortgage arrears\u2014but should they be? The arrears rate climbed again in August, according to the Canadian Bankers Association (CBA)<\/a>, which represents the country\u2019s largest lenders. Investors have brushed off the rise as a return to normal after record lows. What they may not realize is that the late 1980s also saw a record low\u2014followed by a long, painful climb. This time, it\u2019s rising even faster.\u00a0\u00a0<\/p>\n

Canadian Mortgage Arrears Rise To Highest Rate In Nearly 5 Years\u00a0<\/p>\n

Canadian mortgage arrears rate for the CBA\u2019s largest member banks.\u00a0<\/p>\n

Source: CBA; Better Dwelling.\u00a0<\/p>\n

Canadian mortgage arrears continue to climb. The CBA reported the rate rose by 1 basis point (bp) in August to 0.24%, up 4 bps from last year and the highest since September 2020. The level remains low\u2014but typically in finance it\u2019s the velocity (or speed of change) that provides real insight.\u00a0<\/p>\n

Mortgage Arrears Rising The Fastest Since The Global Financial Crisis\u00a0<\/p>\n

It\u2019s not the level of arrears that matters\u2014it\u2019s how fast they\u2019re climbing. A high but stable rate means the scope of the problem is known, and it\u2019s been mitigated. No surprises. A rising one signals an erosion, where we\u2019re still learning the scope, extent, and cause of the problem. When it comes to risk, surprises are no beuno.\u00a0<\/p>\n

Canada\u2019s arrears rate fell to a record low of 0.14% in mid-2022. By August 2025, it climbed to 0.24%\u2014a 71% increase in under three years, marking the fastest rise since the global financial crisis.<\/p>\n

That sounds alarming, but context matters. While the 2008 crisis disrupted global credit markets, it didn\u2019t have a big impact on Canadian real estate. The market hadn\u2019t become overextended like in the US, as major cities like Toronto were still in the process of a recovery in real terms from the last major downturn. We need to look further back.\u00a0<\/p>\n

Canadian Mortgage Arrears Mirror The \u201990s\u2014But Even Faster<\/p>\n

Canada\u2019s last major housing correction occurred shortly after the mortgage arrears rate fell to a record low of 0.18% in 1989. Over the next 91 months, the rate climbed to 0.65%\u2014an 18.4% compound annual growth rate (CAGR). For context, a $100,000 investment growing at that pace would triple to $361,000 over the same period.\u00a0<\/p>\n

The current climb has persisted for 35 months, with arrears rising from 0.14% in mid-2022 to 0.24% in August 2025. That\u2019s a 20.3% CAGR\u2014over 10% faster than the \u201990s. If the trend continues for the same length, the arrears rate would hit 0.57%, matching the rate in 1996. Climbing for that long may seem absurd\u2014but prominent economists are warning investors that this correction will persist for years<\/a>.\u00a0<\/p>\n

Foreclosures, however, may not follow the same path. In 1990, Ontario consolidated mortgage law to simplify the Power of Sale\u2014a faster, cheaper alternative to foreclosure that allows lenders to sell a property without taking possession. While the remedy existed previously, the change further simplified it and helped to standardize it in mortgage contracts. Considering the recent explosion of use in Southern Ontario today<\/a>, lenders may not be worried\u2014but that isn\u2019t very comforting for households, is it?\u00a0<\/p>\n

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