Toronto Mortgage Delinquency Rate Surges 71% Higher

The real estate slowdown in Canada’s largest city is starting to show increasing signs it’s not just a blip. Greater Toronto saw a sharp climb to its mortgage delinquency rate in Q4 2023, according to Equifax data. The share of delinquent mortgages has nearly doubled in just over a year, leading to the highest rate since 2016. 

Share of Delinquent Mortgages Nearly Doubled In Toronto 

Greater Toronto mortgage delinquencies are rising back to normal extremely fast, after unusual low activity. The rate rose one basis point (bp) to 0.12% in Q4 2024, having climbed over 5 bps over the past year. The numbers may sound small, but this is an unusually fast climb. 

Toronto Mortgage Delinquencies Are On The Rise

The share of delinquent mortgages as a share of all mortgages in Toronto CMA.

Source: Equifax; CMHC; Better Dwelling.

Toronto Mortgage Delinquency Rate Climbed 71% Over A Year

To highlight just how absurd this growth is, let’s look at it in conventional terms. The share of mortgages in delinquency rose a whopping 71.4% over just one year. Nothing even close to this kind of growth has been seen in at least a decade, even during the 2017/2018 mini-correction after the rollout of a non-resident buyer tax.  

Toronto Mortgage Delinquencies Are Rising At An Unusually Fast Rate

Annual growth in the mortgage delinquency rate for Toronto CMA.

Source: Equifax; CMHC; Better Dwelling.

Over a span of five quarters, Toronto’s mortgage delinquency rate went from the record low to the highest since 2016. Not all that long ago, but the speed is unsettling.

Rising Mortgage Delinquencies Typical of Investor Markets 

It’s important to remember that delinquencies aren’t a sign of payer health, but demand. During real estate booms, there are plenty of people that can’t afford their mortgage. However, they can sell their home faster than the home can be foreclosed. 

In markets with soft demand, it tends to take much longer to sell. That can increase the odds of delinquency and foreclosure. While the narrative focuses on people in over their head, long-term owners tend to be much more flexible, since they have an equity cushion. That allows these sellers to take a price cut if needed to accelerate a sale. 

Historically, it’s amateur investors behind a sharp increase of mortgage delinquencies. They’re more heavily leveraged, and less flexible to losses, thus increasing their vulnerability. The recent boom of investors capturing first-time homebuyer market share, and a high concentration of newly minted cash flow negative “landlords,” definitely make this a possibility. 

17 Comments

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  • Mortgage Guy 1 month ago

    Canada’s delinquency rate is low in contrast to the US because the US considers them delinquent for stats at 60 days vs Canada at 90 days. The loans are delinquent at 1 day past due, the issue is the concentration. The US also includes private lending, whereas Canada doesn’t so a good 1 in 10 mortgages are outside of public lender analysis.

    • Jon 1 month ago

      Can’t they just request the land records?

      • Omar 1 month ago

        Prohibitively expensive. The gov’s way of hiding the data is making it a per transaction cost, so even the gov pays for analysis of its own records. That’s how dumb we are as taxpayers.

        I believe Steve-O said it costs 5-figures for Transparency International to do that analysis on money laundering in Toronto. An analysis the government should be doing, but rich guys with a little extra time and non-profits need to do them instead.

  • Jon 1 month ago

    No sh!t. There’s no bid on anything, and it’s all investor owned. Even with more inventory there’s still a lot of people who think rates will get cut and they won’t be able to buy a home, so they’re bidding up against themselves. LOL!

    • Motmot 1 month ago

      @Jon My in-laws just sold their home. Their realtor/friend told us that some buyers are starting to panic that interest rates will go down and the buying frenzy & bidding wars will start up again, so they’re willing to buy something now, at a higher interest rate. My in-laws’ place took 6 weeks to sell. Only one offer.

      It’s hard to feel sorry for “amateur investors.” Speculators have played a large role in driving up real estate prices.

  • Ahmed 1 month ago

    Finally, we’re getting some good news in Canada.

  • Randy Carlson 1 month ago

    Interest rates should be 2% LOCKED for up to 30 years. Not this constant up, down, zero whatever rate fixing that Canadians have to go through and then stress that they can’t pay for a house they have been paying for ! Most for 5 years or more. Come on, we already pay as much interest as we do for buying the house. IE: 500k house cost 495k in interest costs over a 25 year mortgage. That’s almost a million dollars invested… no wonder house prices are so high !

    • Gerald Haw 1 month ago

      Canada can’t even secure investors for a 5-year term. No one’s funding a 30-year loan at 2% with governments that can’t control spending, and pisses off half the world on a constant basis. Even the US is struggling to find Treasury buyers.

    • Yoroshiku 1 month ago

      Then again, 20 years of artificially low interest rates have had the negative unintended consequence of creating massive housing bubbles in BC & ON. Lots of people have made lots of money in real estate. It has been good for tax coffers too. Now the government doesn’t know how to engineer a soft landing so here’s not a housing collapse like the US had in 2008. ‘He who rides a tiger is afraid to dismount.’

  • [email protected] 1 month ago

    Nothing to see here, everything is fine.

  • Mark Cle 1 month ago

    🥳

  • Edwin McLearen 1 month ago

    The government needs to step in and help these people.

    • VOWG 1 month ago

      More government is not needed. Less would be more in the case of government.

  • Frank 1 month ago

    The system is set up so regular investors who have tenants that are squatting not paying rent causing financial turmoil and mortgage delinquencies. Money laundering has always been a problem in TO and BC outbidding regular buyers .

  • Tim 1 month ago

    No need for word play, I will give it to you the straight explanation. Mortgage delinquency means late or no payments.

    • Shara 1 month ago

      People are late with mortgage payments all the time. The concern is when they can’t sell before it’s considered statistically delinquent at 90 days.

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