In its Q2 2025 Client Credit score Tendencies name, Equifax stated Canada’s financial system is displaying pressure as development slows and households face larger residing prices.
“GDP noticed a noticeable decline within the second quarter, each general and on a per-capita foundation,” stated Rebecca Oakes, Vice-President of Superior Analytics at Equifax Canada. “There are a variety of challenges when it comes to buying and selling situations throughout Canada.”
Home demand has cushioned the macroeconomic outlook, with authorities spending and shopper outlays serving to to forestall a deeper downturn, Oakes stated.
Nonetheless, the labour market is weakening, with over 60,000 jobs shed in August and unemployment rising to 7.1%, based on Statistics Canada.
“An increase in unemployment is a shock issue when it comes to credit score measures, similar to cost behaviours,” Oakes stated, pointing to the truth that rising unemployment will instantly affect many households’ skill to satisfy larger mortgage funds.
On the credit score facet, Oakes famous that general shopper debt is up about 3% year-over-year, although development has slowed amid weaker inhabitants good points and tighter credit score use.
Equifax additionally pointed to a rising divide between customers with and with out mortgages: debt saved rising for non-mortgage holders in Q2, whereas mortgage holders saved will increase extra contained.
Renewals, not new lending, driving mortgage exercise
Equifax stated Canada’s whole mortgage steadiness is about $1.9 trillion, up 2.4% year-over-year, with the typical steadiness at $247,000.
The agency famous that even with decrease charges and slight value drops, first-time consumers proceed to take a seat on the sidelines in anticipation of improved affordability.
Even so, first-time purchaser exercise edged up 1.8% in comparison with final yr, although participation fell in Ontario, B.C. and Alberta. These coming into the market are borrowing extra, with the typical first-time mortgage quantity up 4% year-over-year to just about $430,000.
“Mortgage development stays sluggish, and general a restoration has not but materialized,” stated Swarnima Pandey, Analytics Insights Supervisor at Equifax Canada.
As an alternative, renewals have change into the primary driver of mortgage exercise via the second quarter of 2025. Equifax information present renewals and refinancings surged 27% year-over-year, with new mortgage originations up 15.3% largely on the again of this renewal wave.
Pandey famous that in a number of markets, the majority of renewals are leading to cost shocks as debtors depart ultra-low pandemic charges for mortgages that add tons of to month-to-month prices.
Whereas mortgage holders have largely saved different credit score use in test, renewals are testing family budgets in methods not seen in additional than a decade.
“At the moment most renewals are in cost shock,” stated Pandey. “Debtors are renewing at a lot larger charges than their authentic loans, particularly for individuals who secured mounted charges throughout the pandemic.”
Dangers concentrated in key markets
For lenders, Equifax harassed that the affect of renewals varies extensively by area.
Delinquencies are concentrated within the provinces the place dwelling costs surged most throughout the pandemic, particularly Ontario and British Columbia. Common mortgage values there are about 20% above the nationwide common, leaving mortgage holders extra uncovered to rising charges.
Equifax reported Ontario’s 90+ day mortgage delinquency fee reached 0.27% in Q2, whereas B.C.’s was 0.19% — each larger than final yr. By comparability, most different provinces stay beneath pre-pandemic delinquency ranges, highlighting how dangers are concentrated within the high-value markets.
“Excessive-value mortgages are the primary perpetrator,” Pandey defined. “The Canadian market general appears regular, however the true threat is concentrated within the high-value markets that ran hottest throughout the pandemic.”
Kathy Catsiliras, Vice-President of Analytical Consulting at Equifax, added that the slowdown in gross sales is compounding the difficulty. “The shortage of gross sales exercise in Ontario and B.C. has had a major affect on general mortgage lending,” she stated. With resale exercise subdued, the market stays successfully on maintain, awaiting both fee aid or an enchancment in affordability.
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credit score developments delinquencies equifax Canada Kathy Catsiliras Market Pulse shopper credit score developments rebecca oakes renewals steven brennan Swarnima Pandey
Final modified: September 10, 2025
