Canada’s banks just saw the first improvement in missed mortgage payments in nearly a year and a half. Canadian Bankers Association (CBA) data shows the mortgage arrears rate fell in June. While not much of a reduction, any signs of stabilization are welcome. Unfortunately, it’s not clear that is what’s actually happening here. The improvements are largely the result of a rounding skew, while bank mortgages have hit an almost 6-year low.
Canadian Mortgage Arrears Rate Makes First Drop In Over A Year
Canadian bank mortgage arrears rate: Mortgages 90 days past due (DPD) as a share of total mortgages.
Source: CBA; Better Dwelling.
The mortgage arrears rate at Canadian banks fell for the first time in well over a year. The rate fell 0.1 basis point (bp) to 0.28% in June, remaining 5 bps above last year. This was the first monthly decline for the rate since March 2025, which is a welcome improvement. However, the rate is still double 2022’s lows, and the progress looks even smaller when broken down.
Canadian Mortgage Arrears Improvement Was Just 40 Fewer Arrears
Canadian bank mortgage arrears: Total number of mortgages 90 days past due (DPD) held by banks.
Source: CBA; Better Dwelling.
Breaking the rate down reveals just how big (or tiny) this improvement actually was. Banks saw mortgages in arrears fall 0.28% (-40) to 14,021 in June, up 25.2% (+2.82k) from last year. That’s right, just 40 fewer mortgages in arrears dragged that rate lower. It was on the rounding threshold—0.285% in May vs 0.284% in June. The minor shift was just enough to produce the first drop in over a year, but the rounding did most of the work here.
Canadian Bank Mortgages Fall To Lowest Level In Nearly 6 Years
The total number of residential mortgages held by Canadian banks.
Source: CBA; Better Dwelling.
Net mortgage originations continue to slide lower at Canada’s banks. The number of mortgages on their books fell 0.02% (-777) to 4.92 million in June, 0.71% (-35.2k) lower than last year. The drop marked the ninth straight month, leaving banks with the fewest mortgages since October 2020, nearly 6 years ago.
The arrears rate made its first drop in well over a year, but it was only a few dozen shy of the prior month. That’s far from the recovery signal many are likely to see looking at just the rate alone. However, fewer bank mortgages may also be a bigger red flag than the actual arrears rate. Banks often sell underperforming mortgages or deny renewals, sending those borrowers to B lenders. If that’s what drove the minor reduction, we have a different story here. Fewer mortgages in arrears and fewer mortgages in arrears at banks but more at B lenders, aren’t the same. They also mean very different things for the general economy.
