The number is out, and it sounds worse than it is.
Canada's mortgage arrears rate reached 0.25% in October, the highest since September 2020. Headlines are doing their thing. But here's what most coverage misses: this is still a remarkably healthy market, and the real story is about what happens next.
The Numbers in Context
The Canadian Bankers Association reported 12,236 mortgages in arrears by 90 days or more at month-end. That's up from 12,040 in September, continuing a gradual climb that started in mid-2023 when arrears sat at historic lows around 0.15%.
Let's put that in perspective:
- 99.75% of Canadian mortgage holders are current on their payments
- The all-time high was 1.03% in 1983
- BMO forecasts arrears will peak around 0.34% by mid-2025
- The long-term average is 0.40%, which we're still well below
This isn't a crisis. It's a normalization from unsustainably low pandemic-era figures.
Why It's Rising
Three factors are driving the uptick. First, interest rates. While the Bank of Canada has cut to 2.25%, many homeowners are locked in at sub-2% rates during the pandemic. Those renewals are hitting now, and payment shock is real.
Second, the labour market is softening. Canada's unemployment rate has climbed from 5.0% in early 2023 to 6.6% in January 2025. Not alarming, but not nothing. The CBA has noted that arrears closely track employment.
Third, equity erosion in some markets. When prices were climbing, struggling homeowners could sell and walk away whole. That escape hatch has narrowed in some regions.
The Regional Story
Saskatchewan continues to post the highest arrears rate at 0.50%, followed by Manitoba (0.35%) and Atlantic Canada (0.29%). Ontario sits at 0.26%, slightly above the national average. British Columbia (0.21%) and Quebec (0.19%) remain the standouts.
These regional differences matter for brokers working in specific markets. A client in Saskatoon faces different pressures than one in Vancouver.
The Renewal Wave Is the Real Story
According to the Bank of Canada, about 60% of all outstanding mortgages will renew in 2025 or 2026. Approximately 60% of those borrowers will see their payments increase. Most are five-year fixed-rate mortgages taken out during the pandemic at historically low rates.
For brokers, this is the conversation happening right now. Not the 0.25% in arrears. The 99.75% who are current but nervous about what renewal looks like.
What Smart Brokers Are Doing
The mortgage stress test appears to be passing its first real test. More than 90% of mortgages expected to see payment increases at renewal will still qualify under stress-tested levels. But "qualifying" and "comfortable" are different things.
This is where client retention matters. The broker who reaches out before renewal, who explains options clearly, who provides scenario planning, that's the one who keeps the client and earns the referral.
Waiting for clients to call you is a strategy. It's just not a good one.
The Bottom Line
Rising arrears are worth monitoring, not panicking over. The fundamentals remain sound. Employment is stable. The stress test is working. Most borrowers will navigate renewals successfully.
But "most" isn't "all." And the brokers who recognize that some clients need extra guidance right now will build the relationships that compound over the next decade.
The question isn't whether arrears are rising. It's whether you're having the conversations that matter before your clients become a statistic.
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