Mortgage stress is rising.
Mostly in Ontario.

Mortgage stress in Canada is an Ontario story, and the worst of it sits with GTHA borrowers who went private and can't get back to a bank.

CMHC says mortgage stress "remains contained nationally but is rising unevenly." I think that's right nationally and too polite about Ontario. Canada's arrears rate is still low by history. But averages hide where the damage is, and the damage is in Ontario.

Ontario's 90+ day arrears rate was 0.06% through most of 2021 and 2022. By Q2 2026 it was 0.32%. CMHC says that's close to levels last seen around 2008. B.C. went from 0.10% to 0.26%. Alberta, helped by energy prices, was flat at 0.27%.

Inside Ontario it's the GTHA and Southwestern Ontario. Toronto went from 0.24% to 0.33% in a year. London, Windsor, Oshawa, St. Catharines-Niagara, Hamilton and Kitchener-Cambridge-Waterloo all rose. CMHC points at tariffs, weaker jobs and a resale market where stressed owners can't sell or refinance easily.

And CMHC doesn't think this is the top. Its forecast has Ontario rising to 0.44% by June 2027, with Toronto the most exposed city in the country.

People protect the mortgage. They stop paying the car, the card and the line of credit first. So those numbers move before mortgage arrears do.

All three are rising. Auto loan delinquency was 2.51% in Q2 2026 and lines of credit 1.05%, both the highest in CMHC's series back to 2014. Among mortgage holders, LOC delinquency went from 0.38% to 0.45% in a year and credit cards from 0.75% to 0.81%.

Bankruptcies tell the same story. New bankruptcies among mortgage holders were 0.66 per 1,000 in Q2 2026, up 25% in a year. For people without a mortgage, the rise was 5%. The safe group is getting less safe.

And it's the existing book. The share of mortgage balances held by borrowers with a credit score under 600 rose from 1.11% in 2022 to 1.74%. New lending to that group is flat. People who had good credit when they got the mortgage are slipping.

Here's the trap. In 2021 and 2022, some buyers couldn't qualify with a bank at peak prices. Self-employed, stretched, bridging a purchase before a sale, or buying an investment condo that didn't carry. A private lender or mortgage investment corporation (an MIE) said yes. Short term, higher rate, often interest-only. The plan was to refinance into a bank (an A lender) or a B lender in a year or two once prices kept rising.

Prices didn't keep rising. Valery's own research found that 80% of GTA homes bought in 2021 or 2022 and resold this past year sold for less than the owner paid. For condos bought in those years it was 87%. In Brampton, homes that sold below purchase did so by a median of 14.9%. That equity was the whole exit plan.

Getting back to a regulated lender means a brand new mortgage. You have to pass the stress test at your contract rate plus 2% or 5.25%, whichever is higher. You can't refinance past 80% of the home's value, and on insured mortgages lenders cap total debt service at 44% of income. CMHC's numbers show how far GTHA private borrowers are from that: 29% of GTHA MIE balances belong to borrowers spending more than 60% of income on debt, and the share of uninsured balances above 80% loan-to-value rose sixfold to 9.2%.

Interest-only made it worse. 69.7% of GTHA MIE balances pay no principal at all, so payments built no equity while prices fell. So borrowers renew with the private lender at whatever rate it charges, or they sell into a soft market, or the lender sells for them. That's power of sale.

CMHC's data show it. MIE delinquency hit 2.57% in Q2 2026, about nine times the banks. In the GTHA, 11.1% of MIE balances were 90+ days in arrears in Q1 2026, up from 3.0% in late 2023. CMHC says loans are staying in arrears longer, which means problem loans aren't getting resolved. It also flags people who borrowed heavily to buy houses and townhouses in the 905 during the pandemic, naming Brampton and Oshawa.

Keep it in proportion. MIEs hold 1.8% of outstanding mortgage balances, per CMHC, so the banks will be fine. The forced sellers are concentrated here, and that's where the distressed deals come from. This is the part of the report I'd read twice.

The 5-year fixed used to be Canada's default mortgage. In January 2020, 46% of new bank mortgages were 5-year fixed or longer. In June 2026 it was 10%. 39% were 3-to-5-year fixed and 36% were variable.

Why? Price and flexibility. On October 27, 2026, the lowest insured 5-year variable on WOWA was 3.25%. The lowest insured 5-year fixed was 4.34% and 3-year fixed 4.29%. Prime was 4.45%. On a $500,000 mortgage over 25 years, 4.34% is about $2,723 a month. 3.25% is about $2,431. That's roughly $290 a month.

Pick a 5-year fixed if you need the payment locked and can't absorb a hike. You pay a bit more for certainty and your penalty to break it can be large. Pick a 3-year fixed if you think rates will be lower in three years and want to reprice sooner. Today it costs about the same as the 5-year. Pick variable if you have room in the budget, want the lowest payment now and may sell or refinance early. You carry the rate risk. My take: at today's prices the 3-year fixed is the easy middle. It costs about the same as the 5-year and you reprice in 2029.

CMHC's warning: shorter terms and variable let borrowers benefit sooner if rates fall, but leave them more exposed if rates rise. And fixed rates have been going up. WOWA's 5-year fixed insured rate was up 25 basis points in 30 days. Valery's read of National Bank's September note covers why bond yields moved ahead of mortgage rates.

On renewals, CMHC thinks the biggest shock has passed. Some 2021 five-year borrowers, and to a lesser degree some 2022 borrowers, still face higher payments. Most others may renew near or below their old rate if conditions hold.

Payments use semi-annual compounding on all four rows so they compare cleanly. Rates are the lowest advertised for prime Ontario borrowers on WOWA.ca, updated October 27, 2026 at 6:36 p.m. ET. Your rate will differ. More on rates and the recovery: Rising rates are a problem for a thin recovery.

Mortgage lending is barely growing. Originations at chartered banks were flat in the first half of 2026 compared with a year earlier. Same-lender renewals jumped as pandemic mortgages matured.

Insured mortgage balances stopped shrinking in Q2 2026, with median growth of 0.40% after more than two years of decline. CMHC links that partly to expanded insurance eligibility. Uninsured mortgages still drive growth, but they're slowing.

Banks are setting more aside. The median bank's expected credit loss ratio was 0.149% of mortgage balances in Q2 2026, more than double where it sat before the pandemic. The worst quarter of banks hit 0.337%. Three in four banks expect bigger losses than a year earlier. It's still under 1% of balances. But I read that as banks bracing for more.

Verified means checked against the primary source on October 27, 2026. Third-party means taken from a named source we didn't rebuild. Conflict means CMHC's own page gives two numbers, and we say which one we used.