Younger borrowers pulled back on plastic, but mortgage renewal shocks still loomed
Equifax Canada’s latest Market Pulse report revealed a consumer credit landscape that has grown more fragile in late 2025, even as an unusually cautious holiday season appeared to blunt the typical spike in January credit card delinquencies.
The picture that emerged was one of “two Canadas”: older, higher score borrowers who remained resilient, and younger households and those in Ontario and the western provinces who showed clear signs of strain.
Total consumer debt climbed to $2.65 trillion in the fourth quarter, up just over 3% year over year, driven by a $50.26 billion rise in mortgage balances and a 4.5% jump in non‑mortgage debt.
Missed payments on non‑mortgage products peaked at the end of December, with 90‑day‑plus delinquency edging up to 1.73%, and consumers aged 26 to 35 posting the highest delinquency rate at 2.55%.
Younger borrowers under pressure, regions diverge
Equifax data showed that Ontario recorded the fastest acceleration in non‑mortgage delinquencies, up 10.31% from a year earlier, while Alberta carried the highest missed‑payment rate at 2.45%. More affordable markets in Atlantic Canada and Quebec saw delinquency rates stabilize or fall.
“Our data continues to show a clear divergence in how consumers in certain regions and demographic groups are managing income instability and high cost of living pressures,” said Rebecca Oakes, vice‑president, advanced analytics at Equifax Canada.
“The good news is that for the most part, Canadians seem to be responding to these challenges in a credit‑responsible way, with less holiday spend placed on credit cards this year,” she said.
Inflation‑adjusted card spending in December slipped 0.7% over year to $2,297, with the steepest pullbacks in Western Canada. Younger adults led the cutbacks, even as card balances still climbed to a record $131 billion.
“The fourth quarter is typically where we see the largest growth in credit card balance with rising missed payments emerging in January,” Oakes said.
“The pullback in spending helped to curb some of the holiday effect with around 30k fewer consumers missing a payment in January compared to 12 months ago.”
A TD survey found that more than one in three Canadians (36%) intended to cut back on holiday expenses last year, up from 32% in 2024, as households redirect spending toward day-to-day needs.
Mortgage renewal shocks remained front and centre
Mortgage renewals continued to dominate new originations in the fourth quarter, pushing total mortgage debt to $1.95 trillion, up 2.6% year over year.
With the Bank of Canada holding its policy rate at 2.25% through late 2025, households did see some relief compared with the peak of the rate‑hike cycle, but brokers and lenders still faced pronounced payment‑shock risk as loans reset from ultra‑low pandemic rates.
High mortgage balances remained a major hurdle to entry. Average new mortgage amounts rose 4.1 per cent to $363,778, and the figure for first‑time buyers climbed 5% to $441,301.
“Interest rate stabilization is appearing to have a positive impact on homeowners and the Canadian mortgage industry, however in hotter housing markets, affordability remains a concern,” Oakes said.
“We continue to see rising missed payments on higher value mortgages in Ontario as post‑renewal payment levels prove too high for some consumers,” she said.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
