Thousands are falling behind on payments as rising renewal rates strain household budgets
More Ontario homeowners are falling behind on their mortgage payments as rising borrowing costs continue to strain household finances.
New data from Equifax Canada shows that the province’s mortgage delinquency rate, representing homeowners who have missed payments for at least 90 days, rose to 0.22% in the fourth quarter of 2024, up from 0.19% in the third quarter and 0.12% in the same period of 2023.
Despite multiple rate cuts by the Bank of Canada over the past seven months, homeowners are still facing significantly higher mortgage rates upon renewal compared to when they first took out their loans.
“Our numbers are telling us that there are more consumers struggling,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada. “We are not seeing delinquency rates slowing.”
Equifax data shows that more than 11,000 Ontario mortgage holders missed a payment in the fourth quarter of 2024. Many of these borrowers are also carrying larger mortgage balances, making them more vulnerable to rate increases.
At the end of last year, the average balance for a new mortgage in Ontario was $434,744, significantly higher than the national average of $344,928, which includes renewals.
“There are more consumers with higher balances that will see a bigger increase in payments,” Ms. Oakes noted in the report.
The Bank of Canada has cut its benchmark interest rate from 5% to 3% since June, easing some financial strain. However, mortgage rates remain significantly higher than the ultra-low rates seen during the pandemic.
Read next: How severe could the upcoming mortgage renewal shock be?
The average five-year fixed mortgage rate stood at 4.29% at the end of 2024, down from 5.22% a year earlier, data from Mortgagelogic.news showed. Meanwhile, five-year variable mortgage rates averaged 4.5%, compared to 6.23% in late 2023.
While these reductions offer some relief, today’s rates remain far higher than the sub-2% levels seen during the pandemic, when historically low borrowing costs fueled a real estate boom. In Ontario, home prices surged by over 70% from 2020 to their peak in early 2022. Though prices have since come down, they remain nearly 40% higher than pre-pandemic levels, leaving many homeowners financially stretched.
Mortgage delinquency rates in Toronto and London were slightly higher than the provincial average, at 0.23% and 0.27%, respectively.
The situation is expected to worsen in 2025. Canada Mortgage and Housing Corporation (CMHC) estimates that more than one million fixed-rate mortgages nationwide will come up for renewal this year, exposing even more homeowners to payment shocks.
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