Canadian banks are seeing mortgage arrears rates climb to multi-year highs, according to the Canadian Bankers Association (CBA). Historically, the Big Six banks are known for their low-risk approach, but recent regulatory filings show that most now have much higher mortgage arrears. The unusual skew is far from over, with most banks also reporting faster arrears growth.
Canadian Mortgage Arrears Rate Hits Multi-Year High
The CBA has observed a rising trend of arrears. The arrears rate climbed to 23 basis points (bps) in June, up 4 bps (+21%) from last year. While the rate isn’t at dizzying heights, it’s still a substantial jump for just a year and the highest reported since February 2021. Credit quality is most definitely eroding at a national level.
Despite Canada’s Big Six representing the majority of loans and a lion’s share of the CBA’s reporting members, most of these banks have much higher arrears rates.
Canadian Mortgage Arrears Rate Higher Than Average At Most Big Six Banks
Canadian mortgage arrears rate (basis points, Q3 2025).
Source: Better Dwelling; CBA; Big Six regulatory filings.
Canada’s Big Six banks are historically known for having better than average performance, but not this time. The latest Q3 2025 regulatory filings (ending July 31st) show that five of the Big Six banks have residential mortgage arrears higher than the CBA average. The highest is BMO at 37 bps, sitting 14 bps higher than the national average. It’s followed by CIBC (36 bps), RBC (31 bps), National Bank (27 bps), and Scotiabank (24 bps)—the last being just a hair above the national average.
The only Big Six to outperform the average was TD with an arrears rate of just 13 bps.
Canada’s Big Six Banks Have Seen Mortgage Arrears Surge
Canadian mortgage arrears annual growth (Q3 2025, %).
Source: Better Dwelling; CBA; Big Six regulatory filings.
As we regularly mention, the actual number is less important than the velocity of change. A stable market, even one underperforming, doesn’t present as much immediate concern as one that’s actively deteriorating. It’s only when a dramatic shift occurs, and performance becomes uncharacteristic, that it signals a problem.
What we’re seeing is a rapid erosion in residential mortgage borrowers’ ability to meet their obligations. The 21% increase at the CBA is already fast as an average, but four of the Big Six banks dwarf that annual growth rate: National Bank demonstrated the fastest shift, with its residential mortgage arrears 59% higher than last year. It’s followed closely by BMO (+54% y/y), TD (+44%), and RBC (+41%).
Two banks—Scotiabank and CIBC—performed slightly better, both reporting 20% growth from last year.
Canadian Big Six Mortgage Arrears: Household Weakness or Investor Woes?
Canada’s Big Six tend to lead the market in terms of quality, and generally see less volatility. They almost have a monopoly on higher income households with stable income and high credit scores. The fact that they’re leading in arrears, arrears growth, or both, is an unusual development that implies elevated risk. The fact the rates are still aggressively climbing also means these issues are unlikely to hit a plateau soon.
Typically this would sound the alarm for household financial stress, but it may be an investor-driven one this time. As previously noted, investors were the primary buyer of new construction condo apartments. These banks also hold the majority of investor-owned mortgages on recently completed, cash-flow negative condos in Toronto—Canada’s largest market that’s currently in free fall, and heading towards a hard landing.
However, the biggest sign it’s an investor-driven issue is Canada’s bank regulator delaying the adoption of Basel III risk standards. The regulator recently reiterated its delay for the new rules that would see banks adopt global risk weighting. One of the biggest changes would be how banks view non-owner occupied homes, as they’re considered 50% more risky. The regulator previously confirmed these rules would come into effect by 2023, but they have yet to be implemented.
doesn’t TD have way higher car loan delinquencies? How is their mortgage delinquency rate so much lower than the rest?
Does it exclude people who made arrangements? It doesn’t look like there’s a universal standard, and they don’t breakdown 90+ DPD like the other reporting agencies from what it looks like.
LOOK FOR MILLIONS OF CANADIANS TO DUMP ALL THEIR HOMES, CONDOS FARMS AND COMMERICAL PROPERTIES IN COMING YEARS
THEY WANT A PIECE OF AMERICA’S BOOM
https://www.cbc.ca/news/business/canada-snowbirds-u-s-winter-hibernating-1.6223569
The problem with all this is its all lagging indicators. This means its many times worse than it looks. Bank repos on car loans are also.way way up. So unless carney has some magic fix for this, and it cant be what hes done so far, since that is what got us here, which no one seems to understand. He also made a mess in the uk, both countries are now in a serious mess. So he doesnt have a magic fix
I agree there’s no “magic fix”. I think interest rates have remained too low for too long.
It was necessary for Carney to lower interest rates during the 2008 global financial crisis and even to keep them low fir a while to spur recovery. However, then they stayed too low for too long after the crisis had resolved, resulting in increased housing prices, as buyers used low interest rates to make higher bids on housing purchases.
Nevertheless, I don’t understand why you blame Carney for interest rates remaining low after he was no longer governor of the bank of Canada.
Carney did not need to lower rates as low as he did nor keep them low throughout the rest of his tenure.
Low interest rates spark spending and it only worked in RE.
If you look at an interest rate vs inflation graph throughout history, you’ll notice that inflation has an inverse relationship to interest rates. The geniuses at the BOC know this, but decided to tank interest rates anyways, and keep them there.
Even Tiff himself was crying about a housing bubble in 2014 and look how well he’s handling things.
That’s what you get when you rely on real estate and rent-seeking from exploiting newcomers just so that they can become another consumer in Canada just existing to pay for overpriced rent
Yikes, Stephen! Is delaying the Basel III implementation merely to avoid bank disclosure of how much trouble Cdn RE investors (and the banks funding them) are in, and therefore to keep trying for that mythical soft landing in Cdn RE? (And of course to avoid panic among bank shareholders and depositors) “It’s always a good time to buy!” …said every realtor everywhere. (And developer, mortgage broker, politician, landlord, REIT, boomer… so very many vested interests in Canada!)
Not with psychos in the WH the next 3.5+ years – Canadians are physically not gonna invest in US.
Canadians are likely to continue divesting assets in Canada, but those flows may well go to other countries not whatever remains of the crumbling US economy.