Mortgages in the Greater Toronto area originated from $3.3 billion in the second quarter, down from $4.4 billion in the previous quarter. In the larger Vancouver area, origins fell from $2.1 billion to $1.7 billion.
Annualized, the average mortgage loans still increased by 6%.
“While mortgage growth is slowing, our mortgage+ solutions are the primary driver of customers, accounting for 88% of our sources this quarter, and mortgage renewal retention remains high,” said Scott Thomson, President and CEO.
Mortgage+ is a bundled product from Scotiabank that combines mortgages with other products like Chequing accounts or investments, making it easier for customers to manage their financial situation in one place.
Looking ahead to the second half of the year, Thomson expressed optimism that loan growth will begin to recover. “We’ve seen softness, we’ve seen uncertainty,” he said. “But with our second half of the year and ’26, I do think there’s a moment here where you’re going to see a turning point and add more loan growth.”
Fixed-rate mortgage renewals to soar in 2026-27
Scotiabank’s residential mortgage books total $305 billion, with a fixed interest rate of 77% without insurance and 67% of fixed interest rates. A large part of this will be renewed in 2026 and 2027, with maturity of US$90.2 billion and US$100.7 billion respectively in that year.
Among GTA and GVA, the bank’s ratio to uninsured loan-to-value (LTV) from new sources fell slightly, at 60% in the second quarter, down from 62% in Toronto and 61% in Vancouver in the previous quarter.
Delayed steady, but PCLS climb
Mortgage delays in the second quarter also remained stable at 0.24%, up from 0.19% a year ago. This stability is reflected in the case of damage to the bank’s mortgage provisions, which is relatively flat.
However, Scotiabank’s total reserve for credit losses rose to $1.4 billion in the second quarter, up from $1.16 billion in the first quarter. The growth was driven primarily by Canadian banking, with Bank of Canada (PCLS) rising to C$805 million, up from US$428 million a year ago and C$538 million in the first quarter.
Scotiabank chief risk officer Phil Thomas said the bank has built $1.8 billion in construction in regulations since 2022, reflecting the bank’s more cautious position in the current uncertain macroeconomic context.
Scotiabank earnings highlights
Second quarter net income (adjusted): $2 billion (+2%)
Earnings per share: $1.52 (+14%)
| Q2 2024 | Q1 2025 | Q2 2025 | |
|---|---|---|---|
| Residential Mortgage Portfolio | $289B | $304B | $305B |
| Percentage of uninsured mortgage portfolio | 75% | 77% | 77% |
| avg. Loan Value of Total Portfolio (LTV) | 51% | 52% | 52% |
| Portfolio Mixed: There are variable percentages | 33% | 31% | 33% |
| Expiration of more than 90 days (mortgage portfolio) | 0.19% | 0.24% | 0.24% |
| Bank of Canada Net Interest Rate (NIM) | 2.56% | 2.32% | 2.27% |
| Total terms of credit losses | $1B | $1.16B | $1.4B |
| CET1 ratio | 13.2% | 12.9% | 13.2% |
Other key highlights
About Scotia Apartment Market
- Phil Thomas is concerned about the rising risks in the apartment development space, especially given the headlines for buyers, avoiding buyers.
- “Apartments make up 20% of our mortgage portfolio,” he said. “But… we have been very deliberately focusing on Level 1 developers who have experienced a decline cycle through Level 1 cities. So we feel we are not some of the headlines we might see.”
- He added that apartment developers make up only 6% of Canadian banks’ commercial real estate portfolio, with approximately 80% of exposure being investment grade.
- “This is not one of my most concerned issues at the moment.”
Effect on the decline rate
- Scotiabark said that assuming a static balance sheet, 25 benchmark points of short-term interest rates would increase net interest income by about $60 million in 12 months. Banks warn that deposit pricing and customer behavior may affect the estimate.
About Commercial Real Estate
- The bank said it accounted for 8.2% of Scotiabank’s business book and 8.2% of total loans and acceptances, down 3% in the quarter, “reflecting business activities where economic uncertainty, higher construction costs and still relatively high borrowing costs.”
- The portfolio remains concentrated in the residential and industrial sectors. Office exposure accounts for only 9% of the total CRE (total $5.5 billion), with about 80% of the investment grade.
notes: Transcripts are provided by company and/or third-party sources and cannot 100% ensure their accuracy.
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Last modified: May 27, 2025
