Stable versus Struggling: Canada's Financial Divide Widens

Core Insights - A financial divide is emerging in Canada, with some borrowers benefiting from lower interest rates while others, particularly in Ontario, face rising mortgage delinquencies and consumer debt [1][3]. Consumer Debt Trends - Total consumer debt in Canada reached $2.56 trillion at the end of 2024, marking a 4.6$21,931, surpassing pre-pandemic levels [2]. Mortgage Delinquency Rates - In Ontario, mortgage delinquencies have increased significantly, with over 11,000 missed payments recorded in Q4 2024, nearly three times the number in 2022 [4]. - The 90+ day mortgage balance delinquency rate in Ontario surged 90.2% year-over-year to 0.22%, significantly higher than other provinces [4]. - The 90+ day non-mortgage balance delinquency rate in Ontario increased by 46.1% from Q4 2023, with an overall rise in non-mortgage delinquency rate of 23.9%, above the national average of 18% [5]. Regional Financial Strain - Financial pressures are particularly acute in Ontario and British Columbia, with many consumers feeling the strain of high living costs and mortgage renewals at higher payments [3][4]. - In Toronto, the 90+ day non-mortgage delinquency rate reached 2.06%, indicating unique financial challenges in the region [6]. Mortgage Market Dynamics - The Canadian mortgage market showed signs of recovery, with new mortgage originations rising 39% year-over-year, and first-time homebuyers increasing by 28.2% from Q4 2023 [7]. - Mortgage renewals and refinancing accounted for over 50% of new mortgage originations in Q4 2024, with an increase of 10.6% from 2023 [8]. Impact of Interest Rates - Many consumers renewing their mortgages are facing higher monthly payments due to elevated interest rates, affecting around a million mortgages due for renewal in 2025 [9]. - A quarter of mortgage-holders experienced an increase of over $150 in their monthly payments at renewal in Q4 2024 [9]. Consumer Spending and Credit Behavior - Credit card debt rose by 7.8$2,228 per cardholder, a 2.2% increase from 2023 [10]. - Younger and lower-income Canadians are particularly affected, experiencing missed payments on various forms of debt [10]. Age and City Analysis - The average debt for Canadians in Q4 2024 was $21,931, with varying delinquency rates across different age groups and cities, indicating a broader trend of financial strain [11][12].