Canadian Banks See Mortgage Arrears Surge 89% From Record Lows

Key Takeaways

• Arrears rate hit 0.28% in Feb 2026, double 2022 lows
• Delinquencies rose 89% from Aug 2022 record low
• 13,749 mortgages 90+ days past due, up 22% YoY
• Non‑bank lenders now absorb more high‑risk mortgage exposure

Pulse Analysis

The Canadian mortgage market has entered a new phase of stress as arrears rates climb back to pre‑pandemic levels. After hitting historic lows in 2022, the 90‑plus‑day delinquency rate rose to 0.28% in February 2026, a figure not seen since early 2017. This uptick coincides with a broader slowdown in new mortgage originations, but the dominant driver is a sharp increase in borrowers missing payments. The latest data show an 89% surge in delinquencies from the August 2022 trough, pushing the total number of overdue loans to 13,749, up 22% year‑over‑year.

Banks are feeling the impact of this reversal, as higher arrears erode net interest margins and increase provisioning requirements. However, the landscape is changing: major banks now hold a smaller slice of the mortgage pie, with non‑bank lenders and private‑label financiers expanding their footprint. These alternative lenders often tighten renewal criteria or offload risky loans, effectively moving a portion of the credit risk off bank balance sheets and out of the Canadian Bankers Association’s statistics. The result is a more fragmented market where risk concentration may shift rather than disappear.

Looking ahead, policymakers and investors will watch how the Bank of Canada’s monetary stance influences borrower resilience. Persistent high rates could keep pressure on households, potentially prompting further delinquencies and prompting banks to tighten underwriting standards. For investors, the growing role of non‑bank lenders introduces new credit exposure considerations, while borrowers may face stricter renewal terms or higher costs. Understanding these dynamics is essential for navigating Canada’s evolving housing finance environment.