For two years, the phrase "mortgage cliff" circulated through the industry like a slow-motion emergency alert. The premise was simple and scary: millions of Canadians locked in historically cheap mortgages during the pandemic, those mortgages were coming due, and the resulting payment shock would push a wave of homeowners into default. The cliff was coming.
It didn't come, at least not the version everyone feared. But that doesn't mean the landing was clean.
What Actually Happened
Over one million pandemic-era mortgages are rolling over this year, and the payment increases are real. A borrower who locked in at 1.7% in 2021 and is now renewing at closer to 4.5% is facing a materially different monthly obligation. By every reasonable measure, that should have generated a surge in arrears.
It generated a blip.
CMHC data shows mortgage arrears, meaning borrowers 90-plus days behind on payments, rose by seven basis points between Q3 2023 and Q3 2025. In the GTA, the rate more than quadrupled. In Greater Vancouver, it more than doubled. Both of those facts are technically true, and both of them bury the actual number: Toronto sits at 0.26%, Vancouver at 0.18%, and Canada at 0.22%. These are historically low levels. The doubling and quadrupling language is statistically accurate and practically misleading.
Why Canadians Held On
A few things kept the cliff from becoming a crater.
The stress test actually worked. Much-maligned as it sometimes is by buyers and brokers alike, OSFI's mortgage stress test was designed specifically for this scenario, forcing buyers to qualify at rates higher than they'd actually pay and creating a buffer for exactly the kind of rate environment we're now in. Credit where it's due.
Canadians prioritized their mortgages. This is cultural as much as financial. Research and anecdotal evidence consistently show that Canadian homeowners will restructure their entire household budget, cut spending, take on extra work, and defer other purchases before they miss a mortgage payment. Home ownership carries enormous psychological weight in this country, and lenders benefit from that.
Rate cuts took some of the edge off. The Bank of Canada's rate-cutting cycle, which began in 2024, gave some borrowers a softer landing than they would have faced at peak rates.
Where the Stress Actually Went
Here's the part of the story that isn't getting enough attention: the financial pressure didn't disappear. It moved.
Statistics Canada pegs the household debt-to-disposable-income ratio at 176.66%. For every dollar of after-tax income a Canadian household earns, it owes about $1.77. That's not a comfortable margin. Many homeowners have been leaning on credit cards and lines of credit to bridge gaps, with the expectation that mortgage renewal would serve as a consolidation opportunity, rolling higher-interest debt into a lower-rate mortgage.
That strategy is running into a wall. Home prices in major markets have corrected, which means equity has shrunk, and borrowing capacity at renewal is more limited than borrowers expected. As mortgage broker Leah Zlatkin observed in the Financial Post, renewal is often seen as a reset button, but for borrowers whose debt grew faster than their equity, that button isn't working as planned.
This is where the real downstream risk lives in 2026: not mass defaults, but constrained financial flexibility, rising reliance on consumer credit, and clients who feel stuck.
What This Means for Mortgage Brokers and Real Estate Professionals
The clients who didn't default are still your clients, and many of them are quietly stressed about their financial situation. They may not be calling you, but that doesn't mean they don't need to hear from you.
This is the moment proactive outreach pays off. A broker who reaches out before renewal, explains the landscape honestly, walks through consolidation options even when they're limited, and helps a client make a plan is a broker who keeps the relationship. The one who waits for the call may find the client went straight to their bank's renewal offer without shopping the market.
The cliff didn't materialize. But the clients on the edge of it are still out there, and the question worth asking is: do they know you're there for them?
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