Canada’s total mortgage debt climbed to $1.95 trillion in the fourth quarter of 2025, a 2.6% rise from a year earlier, according to new data from Equifax Canada. The uptick comes as borrowers face higher monthly payments, tighter budgets, and a housing market still working through the effects of earlier interest rate hikes.
The report points to steady growth in mortgage balances even as home sales cooled in parts of the country this year. It also signals that many households remain stretched, with renewals moving borrowers from low pandemic-era rates to more expensive terms. Policymakers, lenders, and homeowners are now watching how this debt load will shape spending and risk in 2026.
Background: A Decade of Climbing Balances
Mortgage debt in Canada has grown for much of the last decade, driven by rapid price gains in major cities, population growth, and limited housing supply. During the pandemic, record-low interest rates spurred refinancing and purchases, pushing balances higher. Since then, rate increases have slowed sales and cooled price growth in many regions, but total debt has not fallen.
Equifax Canada’s latest snapshot confirms the trend continued into late 2025. The size of the mortgage market remains large by any measure, even with households cutting back on non-essential spending to manage payments.
“Mortgage debt hit $1.95 trillion in the fourth quarter of 2025, a 2.6% increase from the previous year, according to Equifax Canada.”
What Is Driving the Increase
Several forces help explain the rise:
- Higher average mortgage sizes, even with softer prices in some cities.
- Renewals moving borrowers to higher rates, increasing outstanding balances over time.
- Population growth and household formation keeping steady demand for housing.
Refinancing has also played a role. Some owners have extended amortizations to lower monthly costs, which can slow principal repayment and lift balances.
Borrowers Feel the Strain
For many households, cash flow is tight. Monthly payments have risen after renewals, and variable-rate borrowers have seen costs rise sooner. Households are trimming travel, dining, and big-ticket purchases. Some are making lump-sum prepayments to limit interest costs, while others are deferring renovations or moving plans.
Debt stress does not hit every borrower the same way. Households with stable incomes and savings have more options. Others, especially recent buyers with small down payments, have less room to maneuver.
Banks, Risk, and Policy Outlook
Lenders are focused on credit risk and payment capacity. Stress tests remain in place, and banks are reviewing borrower budgets more closely at renewal. While the 2.6% annual growth rate is moderate, its size matters. A large mortgage market can amplify shifts in interest rates or employment.
The policy debate now centers on two fronts: supply and rates. Easing supply constraints takes time, but new construction, zoning changes, and faster approvals can help. Interest rate decisions will shape payments in 2026. A stable or lower rate path would offer relief, while any renewed increases would add pressure.
Regional and Market Differences
Markets are not moving in unison. Some regions have held prices better due to strong job markets and limited listings. Others have seen larger price adjustments, which can slow new borrowing but may not reduce total debt if renewals dominate activity.
First-time buyers face the hardest math. Down payments are still large, and stress tests limit how much they can borrow. Existing owners, in contrast, often rely on equity to bridge higher payments or refinance.
What to Watch Next
Key signals in early 2026 will include sales volumes during the spring market, renewal waves at higher rates, and any shift in delinquencies. Consumer spending data will also show how mortgage payments affect the wider economy.
For now, the message is clear: mortgage balances are still rising, even as the market cools. The pace of growth is moderate, but the total is large enough to influence household budgets and bank risk management.
Canada enters 2026 with high mortgage debt and a careful policy debate. If rates ease and supply improves, pressure could lift. If not, households and lenders will need to plan for another year of tight finances and slow principal repayment.
