The impact of mortgage market jewelry, as one million contract renewal is imminent and the default value rises
But, according to Rebecca Oakes, Equifax’s senior vice president of Canadian analysis, most of this growth is related to renewal and refinancing, accounting for more than half of the new sources.
Equifax estimates that more than one million fixed-rate mortgages will be renewed in 2025, adding pressure to an already tight market.
In addition, mortgage defaults continued to climb at the end of 2024, with an overall balance of more than 43% up 43% year-on-year. Equifax data also shows that mortgage rates have increased from 0.14% in Q4 2023 to 0.20% in Q4 2024, now exceeding pre-pandemic levels.
“This is driven by higher interest rates and higher consumer payments,” Oakes said.
Recycling in the mortgage market slows down due to increased burden pressure
Ontario and British Columbia in particular, crime rates have reached new highs as homeowners struggle to keep up with the growing payments.
In the fourth quarter, more than 10% of the two provinces’ renewals increased by $500 or more on average, which puts additional financial pressure on borrowers who already manage high mortgage balances.
As household budgets tighten, more homeowners lag behind payments, causing crime to rise.
While lower rates are expected to provide some relief, Equifax warns that the full impact will not be felt until mid-2025.
“In terms of interest rates, yes, they have dropped, but remember that these rates help reduce the impact of overall mortgage crime rates,” said Kathy Catsiliras VP, analytical consulting firm in Canada.
Meanwhile, many borrowers will face payment shocks, especially those with lower fixed-rate mortgages starting in 2020, when interest rates are significantly lower. These homeowners are now transitioning to higher interest rates, resulting in a significant increase in monthly payments.
Equifax also noted that lenders have increased on lending conversions in 2024, with 29% of borrowers opting to move to new lenders – from 26% in 2019 to 26%. This part is attributed to borrowers, which are now allowed to switch lenders without stress testing due to changes in OSFI guidelines.
Young Canadians’ credit card violation
Meanwhile, Equifax data shows that by the end of 2024, credit card spending increased by 2.2% year-on-year.
This marks the highest surge in credit card transactions since December 2020, possibly due in part to federal tax breaks over the holidays.
“Spending levels have been rising since the pandemic,” said Swarnima Pandey, analytical insights manager for Equifax Canada. “Even if we take into account inflation, it’s clear that consumers have spent more and more in recent years.”
On consumer spending, Sean McCormick, vice president of business development at Moneris Data Services, reported that despite continued inflation, the average grocery trading trend has flattened.
“The story here is that consumers have adapted. Consumers have budgets and they only have too much money to spend on groceries,” McCormick said.
However, the overall credit card market is showing signs of pressure as the gap between those who pay the balance in full and those who lag behind payments continues to grow.
According to Equifax, younger consumers are working to keep up with credit card payments, while older generations manage debt more effectively.
“We obviously see the generational gap in credit card payments,” Pandy said, noting that older borrowers with home equity lines of credit (HELOC) will get better, while younger consumers are increasingly paying, leading to higher crime rates.
Equifax reported that interest rates on credit card violations have soared 16.5%, forcing lenders to take a more cautious approach since late last year.
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Credit Card Credit Card Trend Delinquency Equifax Canada Kathy Catsiliras Market Pulse Consumer Credit Trend Mortgage Default Mortgage Trend rebecca oakes rebecca oakes sean McCormick Swarnima Pandey
Last modified: March 13, 2025
