Ontario leads surge in delinquency rates while mortgage refinancing drives credit shifts in Q1
Economic uncertainty continued to influence consumer credit use and financial stability across Canada during the first quarter of 2025, according to Equifax Canada’s Market Pulse Consumer Credit Trends and Insights report.
The total consumer debt reached $2.55tn, reflecting a four percent increase year-over-year, but declined more than $6bn from the end of 2024.
Average non-mortgage debt per consumer rose to $21,859, driven largely by auto loan demand as buyers acted ahead of anticipated price hikes.
Rebecca Oakes, vice president of Advanced Analytics at Equifax Canada, stated that while Q1 usually sees seasonal upticks in mortgage debt, this year saw a quarterly decline.
She noted that non-mortgage debt demand slowed, but balances remained steady, suggesting that consumer payment levels might be decreasing.
Credit card use slows, balances rise
New credit card originations fell 10.3 percent from the previous year.
Consumers with lower credit scores made up a greater share of new openings, which may reflect increasing credit dependency among financially vulnerable groups.
Average monthly card spending per user dropped by $107 to its lowest level since March 2022.
Provinces including Ontario, British Columbia, Prince Edward Island, Nova Scotia and Yukon reported spending reductions between six and seven percent compared to the prior year.
Oakes explained that reduced credit card spending along with higher payment amounts may suggest improving financial discipline.
However, she added that younger consumers are paying less toward balances, with their average pay rate declining 392 basis points—from 62.9 percent to 58.9 percent.
The overall average fell to 52.9 percent. This group also saw the highest increase in minimum payment behaviour, rising 25 basis points year-over-year.
Refinancing drives mortgage growth
New mortgage originations increased 57.7 percent year-over-year, led by refinancing and renewals amid the onset of the “Great Renewal,” with pandemic-era mortgage terms expiring.
The largest renewal and refinancing activity occurred in Ontario, Alberta, and British Columbia, with 28 percent of mortgage holders switching lenders.
Of those switching, 46 percent moved between the Big Five banks.
Oakes described the mortgage market shift as one centred on existing homeowners adapting to complex refinancing conditions. First-time homebuyer activity also rose 40 percent compared to Q1 2024.
Although average monthly mortgage payments fell 7.8 percent to $2,300, the average loan size increased 7.5 percent year-over-year, underscoring ongoing affordability challenges.
Delinquency gap widens
More than 1.4 million Canadians—or one in 22—missed at least one credit payment during Q1 2025.
Delinquency rates grew 8.9 percent year-over-year among non-mortgage consumers, compared to 6.5 percent for mortgage holders.
The 18–25 age group was most affected, with a 15.1 percent increase.
Ontario recorded the sharpest rise in 90+ day mortgage delinquencies, up 71.5 percent year-over-year to 0.24 percent. British Columbia followed at 0.18 percent, up 33.3 percent.
The rest of the country averaged 0.19 percent, a 3.3 percent rise.
Non-mortgage delinquencies also rose most in Ontario, up 24 percent.
Alberta and Quebec followed with 15.9 percent and 13.9 percent increases, respectively.
Youth and auto loan delinquencies rise
Among those under 26, credit card 90+ day delinquency rates reached 5.38 percent, a 21.7 percent year-over-year rise. The overall rate was 3.76 percent, up 15.8 percent.
Auto loan delinquency for this group rose 30 percent to 1.95 percent, compared to the overall rate of 1.08 percent, up 15.3 percent.
Oakes noted signs of improving behaviour with less card usage and early signs of delinquency stabilizing.
However, she cautioned that ongoing pressures from unemployment and food price inflation may continue to affect already stressed regions.
All figures were based on Equifax data from Q1 2025.
