Equifax said in its Q2 2025 consumer credit trends, the Canadian economy showed pressure as growth rate and families faced higher cost of living.
“GDP overall and per capita declined significantly in the second quarter,” said Rebecca Oakes, vice president of Equifax Canada Advanced Analytics in Canada. “There are many challenges in terms of trade in Canada.”
Oaks said domestic demand buffered the macroeconomic outlook, and government spending and consumer spending help prevent a deeper recession.
However, the labor market is weakening, with more than 60,000 jobs falling to 7.1% in August, according to Statistics Canada.
“The increase in unemployment is a shocking factor in terms of credit measures such as payment behavior,” Oaks said, noting that rising unemployment will directly affect the ability of many households to meet higher mortgage payments.
On the credit side, Oakes noted that despite higher population growth and credit, overall consumer debt grew by about 3% year-on-year, despite slowing growth.
Equifax also noted that there is an increasing gap between mortgages and unsecured consumers: non-mortgage holders’ debts continued to rise in the second quarter, while mortgage holders remained in increased debt.
Renew, not new loans, drive mortgage activities
Equifax said Canada’s total mortgage balance was about CAD 1.9 trillion, up 2.4% year-on-year, with an average balance of $247,000.
The company noted that even with lower interest rates and lower prices, first-time home buyers will continue to sit off the court as they expect affordability.
Even so, first-time buyer activity increased by 1.8% compared to last year, despite declines in participation in Ontario, British Columbia and Alberta. People entering the market are borrowing more, with an average first-time loan amount rising 4% year-on-year to nearly $430,000.
“Mortgage growth remains slow and overall has not yet recovered,” said Swarnima Pandey, manager of Equifax Canada Analytics Insights in Canada.
Instead, contract renewals have become the main driver of mortgage activities in the second quarter of 2025. Equifax data shows renewals and refinancing rose 27% year-on-year, with new mortgages originating from a significant increase of 15.3% after this wave of renewal.
Pandey noted that in several markets, most renewals result in payment shocks as borrowers leave behind ultra-low pandemic mortgages to add hundreds of dollars per month.
While mortgage holders have largely retained other credit use, renewals are testing home budgets in ways not seen for more than a decade.
“Today, most renewals are in the payment shock,” Pandy said. “Borrowers renew a lot more than the original loan, especially for those who get fixed rates during the pandemic.”
Risks concentrated in major markets
For lenders, Equifax stressed that the impact of the update varies by region.
The violations are concentrated in the provinces with the highest housing prices during the pandemic, especially Ontario and British Columbia. The average loan value is about 20% higher than the national average, making mortgage holders more vulnerable to rising interest rates.
Equifax reported that the 90-day mortgage crime rate in Ontario hit 0.27% in the second quarter, while the BC mortgage rate was 0.19%, both higher than last year. By contrast, most other provinces remain below pre-pandemic crime levels, highlighting how risk can be concentrated in high-value markets.
“High value mortgages are the main culprit,” Pandy explained. “The Canadian market overall looks stable, but the real risk is concentrated in the hottest high value markets during the pandemic.”
Kathy Catsiliras, vice president of Analytics Consulting at Equifax, added that the slowdown in sales is exacerbating the problem. “The lack of sales activity in Ontario and BC has had a significant impact on overall mortgage loans,” she said. With the resale activity suppressed, the market remains effectively held, waiting for improvements in tax relief rates or affordability.
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Credit Trend Illegal Equifax Canada Kathy Catsiliras Market Pulse Consumer Credit Trends RebeCa Oakes Update Steven Brennan Swarnima Pandey
Last modified: September 10, 2025
