Ontario’s real estate woes are quickly turning into one of the worst downturns in the province’s history. Canadian Bankers Association (CBA) data shows mortgages in arrears surged in January, reaching 5x the lows seen just four years prior. The surge has pushed Ontario’s arrears rate above the national rate, something that’s only occurred twice before. Neither time was great for real estate in the province.
Ontario Mortgage Arrears 5x In Less Than 4 Years
Ontario CBA mortgage arrears: Residential mortgages at least 90 days past due (DPD) at Canadian banks, in thousands.
Source: CBA; Better Dwelling.
Banks are seeing an unusually sharp uptick in mortgage stress across Ontario. They held over 6,223 delinquent mortgages in January, up 47.7% from last year and 5x their pandemic lows. Canadian banks haven’t seen this volume of delinquencies since 2011—15 years ago.
Ontario Mortgage Arrears Hit Highest Rate Since 2011
Soaring arrears have sent the rate 2 basis points (bps) higher in January to 0.29%, up 10 bps from last year. That may sound small for those not used to looking at credit data, but this implies arrears outpaced total originations by 52.6%. The rate is almost 5x (+383.3%) higher than record lows in 2022, also reaching the highest level since 2011.
While 2011 wasn’t the worst period in Ontario real estate history—real prices only just recovered their late-80s peak—it ended with sharp stimulus that led to the BoC issuing a bubble warning. This period and the current trend share an interesting data point with the 1990s real estate crash.
Ontario Surpasses National Mortgage Arrears Rate, Sending A Rare Warning Signal
Ontario vs national CBA mortgage arrears rate, %.
Source: CBA; Better Dwelling.
Canadian banks rarely see Ontario’s arrears rate surpass the national rate, but when it does, it’s an ominous sign. This is one of those times—Ontario surpassed the national arrears rate in September 2025, and currently sits 2 bps above Canada’s 0.27% average in January.
There are only two other times on record where the rate has inverted: The most recent is from 2005 to 2009, kicking off just ahead of the global financial crisis. The other period is 1991 to 1996, during the largest real estate crash in Canadian history.
The current correction is the province’s second-largest, and not expected to end anytime soon. Buyers at the peak of Ontario’s real estate markets were largely investors. Evidence is now emerging of banks using questionable property valuations to help these investors “close” on the purchases they couldn’t otherwise afford. It’s difficult to see how these factors won’t extend the correction even further. At least one of Canada’s Big Six banks sees this correction continuing, without the additional downward pressure from these factors.
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