Insolvencies hit 15-year high, with homeowners facing steep mortgage renewal costs
Insolvencies in Canada climbed by 12.1% in 2024 compared to the previous year, with business insolvencies leading the increase at 28.6%, according to the latest data from the Office of the Superintendent of Bankruptcy.
The hardest-hit industries included construction, transportation and warehousing, and accommodation and food services. The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) reported that total insolvencies – comprising both bankruptcies and proposals – reached a 15-year high, averaging approximately 375 filings per day.
“The rise in consumer insolvencies last year highlights the severity of the financial pressures many Canadians are experiencing, exacerbated by rising living costs and economic instability,” said CAIRP chair André Bolduc.
Despite the Bank of Canada lowering its benchmark interest rate to 3%, down from a peak of 5%, many homeowners renewing their mortgages in 2025 are still facing higher monthly payments than when they last locked in their rates. Prices on many everyday essentials also remain elevated, keeping financial strain on households.
Businesses, meanwhile, are grappling with rising operational costs and economic uncertainty.
“Rising production costs, supply chain disruptions, reduced consumer demand, and overall uncertainty are making it increasingly difficult for Canadian businesses to maintain financial stability, particularly for those reliant on cross-border trade or already facing significant strain,” Bolduc noted.
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Further pressure looms over the economy as the United States considers imposing new trade restrictions. Over the weekend, US President Donald Trump announced plans to introduce sweeping tariffs, including a 25% duty on all Canadian imports and a 10% tariff on energy.
However, following discussions with Prime Minister Justin Trudeau, who made commitments addressing US concerns over border security, both nations have agreed to pause the tariffs for 30 days. The uncertainty surrounding what happens next could add to financial distress for businesses.
Small- and medium-sized businesses are particularly vulnerable to potential tariff-related costs and the loss of key export markets, Bolduc warned.
In the final quarter of 2024, insolvencies increased 5.2% year-over-year, surpassing 35,000 cases. Consumer insolvencies saw a 6.1% jump, while business insolvencies declined by 12.4% during the same period.
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