Higher renewal costs test household budgets in Ontario and B.C., says Equifax

Higher Renewal Costs Test Household Budgets in Ontario and B.C., Says Equifax: A Deep Dive into Canada’s Mortgage Crunch

As Canadian homeowners face the realities of a post-pandemic economy, a new report from Equifax Canada paints a stark picture: higher mortgage renewal costs are putting immense pressure on household budgets, particularly in Ontario and British Columbia. Published on September 11, 2025, the analysis highlights a surge in renewals and refinancings, up 27% year-over-year, driving new mortgage originations by 15.3% in the second quarter of 2025. But this activity comes at a price—many borrowers are experiencing “payment shocks” as they transition from ultra-low pandemic-era rates to much higher ones, adding hundreds of dollars to monthly bills.

In provinces like Ontario and B.C., where home prices skyrocketed during the COVID-19 boom, the strain is most acute, with delinquency rates climbing and financial divides widening. This isn’t just about numbers; it’s about families stretching to cover essentials amid rising living costs, job market uncertainties, and the lingering effects of interest rate hikes. As Swarnima Pandey, Analytics Insights Manager at Equifax Canada, notes, “Mortgage growth remains sluggish, and overall a recovery has not yet materialized.” In this article, we’ll break down the key findings, regional impacts, and what homeowners can do to navigate the challenges.

The timing couldn’t be more critical. With the Bank of Canada holding its policy rate at 2.75% since March 2025 after aggressive cuts earlier in the year, many fixed-rate mortgages are renewing at levels far above the 1-2% lows of 2020-2022. Equifax’s data underscores how this wave of renewals—accounting for over 50% of new originations in recent quarters—is testing resilience, especially in high-cost areas. While some Canadians are benefiting from rate cuts and income growth, others, particularly in Ontario and B.C., are struggling, with missed payments on the rise. This report builds on earlier Equifax insights from Q4 2024, where mortgage delinquencies in Ontario were already 50% higher than pre-pandemic levels, signaling a deepening affordability crisis.

The Surge in Renewals: Driving Activity but Delivering Shocks

Equifax’s latest Market Pulse Consumer Credit Trends Report reveals a dramatic uptick in mortgage renewals and refinancings, which jumped 27% compared to the same period last year. This has propelled overall new mortgage originations by 15.3%, largely because homeowners are refinancing to access equity or switch lenders for better terms. However, the average loan amount for these renewals has increased by 2.9% year-over-year, surpassing levels from 2023 and 2022, meaning borrowers are locking in larger balances at higher rates.

Why the surge? Many mortgages originated during the pandemic at rock-bottom rates—often below 2%—are now maturing. For a typical $500,000 mortgage renewing from 2% to 5%, monthly payments could rise by $800 or more, a shock that’s rippling through budgets. Pandey emphasized that in several markets, the “bulk of renewals are resulting in payment shocks,” with households adding hundreds to their monthly outlays. Despite this, first-time buyer activity has edged up 1.8% nationally, though it dipped in Ontario, B.C., and Alberta. New entrants are borrowing more, with average first-time loans hitting nearly $430,000, up 4% from last year.

This renewal wave isn’t uniform. Mortgage holders have kept other credit use in check, but the pressure is evident in ways not seen in over a decade. Equifax stresses that while national delinquency rates are stable, the story changes at a granular level—especially regionally. For lenders, understanding these variations is key, as renewals are the main driver of activity rather than robust new growth.

Regional Impacts: Ontario and B.C. Bear the Brunt

Ontario and British Columbia are ground zero for this financial strain, according to Equifax. These provinces saw the sharpest home price surges during the pandemic, leading to larger mortgage balances and now higher renewal costs. In Ontario, mortgage delinquencies were more than 50% above pre-pandemic levels as of Q4 2024, with over 11,000 missed payments recorded—nearly three times the 2022 figure. The 90-plus day delinquency rate in Q2 2025 stood at 1.75%, 15.2 basis points higher than the national average, concentrated in Toronto and surrounding areas exposed to tariff-hit sectors like auto and steel.

British Columbia faces similar woes, with affordability stretched thin despite rate cuts. Equifax notes that missed payments are rising among homeowners here, tied to high living costs and renewal shocks. In contrast, provinces like Alberta and the Prairies have lower delinquency changes, far outpaced by Ontario. The report highlights a “financial divide”: some consumers outside these hotspots are faring better, with lower interest rates boosting their finances, while others in Ontario and B.C. grapple with intensified pressures.

This regional disparity ties into broader economic factors. Ontario’s higher missed payment rates—50% above pre-pandemic in late 2024—reflect bigger mortgages combined with discretionary spending and high credit limits. In B.C., nearly half of residents are just $200 away from missing bills, per surveys. As mortgage broker Tuli Parubets told CBC, “Higher delinquency rates in Ontario and B.C. go hand-in-hand with bigger mortgages.” The threat of U.S. tariffs under the Trump administration could exacerbate this, adding to import costs and further testing budgets.

This table illustrates the variations, based on Equifax data and examples from industry reports. It shows how Ontario and B.C. are outliers in the strain from higher renewal costs.

The Financial Divide: Stable vs. Struggling Households

Equifax’s report underscores a growing chasm between financially stable Canadians and those struggling with debt. At one end, some borrowers—often in less affected regions—are seeing improvements from Bank of Canada rate cuts, with monthly payments dropping 7.9% or $200 for first-time buyers compared to last year. Non-mortgage debt per person hit nearly $22,000 in Q4 2024, but stable households are managing it through income growth.

On the other end, struggling groups include young, lower-income renters or non-homeowners in Ontario and B.C., where missed payments on credit cards, lines, and auto loans are rising. Mortgage holders falling behind carry substantially higher balances, reflecting the strain of renewals. Rebecca Oakes, Vice President of Advanced Analytics at Equifax, explained: “At first glance, the numbers are not concerning, but when we look deeper… many are feeling the strain of high living costs and mortgage renewals with higher payments.” The gap peaked in Ontario last year but is starting to ease slightly, though renewals remain a flashpoint.

Even as the overall missed credit payment rate dipped in Q2 2025, 1.4 million consumers missed payments, per an August Equifax update. Homeowners vs. non-homeowners shows the divide: the former face renewal shocks, the latter deal with rising non-mortgage debt amid job losses.

Broader Economic Context: Rate Cuts, Tariffs, and Housing Trends

This comes amid a mixed economic backdrop. The Bank of Canada’s pause at 2.75% after 225 basis points of cuts in 2024 has provided some relief, but unemployment hit 7.1% in August 2025, with 65,500 jobs lost—led by Ontario, Alberta, and B.C. Household debt-to-income ticked higher in Q2, as debt grew faster than income, per Statistics Canada.

Housing activity is stabilizing, with July sales up 3.8% nationally and Toronto transactions surging 35.5%. But RBC warns of price drops in 2026 due to excess supply in Ontario and B.C. Building permits held steady at $11.9 billion in July, driven by Toronto’s multi-unit surge. First-time buyers face surprises like higher loan amounts, but participation is up slightly.

Tariffs pose a new risk: U.S. policies could inflate prices, hitting tariff-sensitive sectors and worsening affordability. Equifax advises lenders to monitor regional risks, as delinquencies concentrate where prices boomed.

Strategies for Homeowners Facing Renewal Shocks

For those in Ontario and B.C. staring down renewals, Equifax and experts offer practical steps:

• Shop Around Early: Compare lenders; even a 0.25% rate difference saves thousands. Use brokers like Tuli Parubets, who urges knowing your renewal payment now.
• Refinance Options: If eligible, refinance to extend terms or access equity, though this surged 27% already.
• Budget Adjustments: Cut discretionary spending; Equifax notes stable households keep credit use in check.
• Seek Support: For those struggling, explore payment deferrals or credit counseling. In Ontario, delinquency hotspots like Toronto may see more relief programs.
• Long-Term Planning: With rates potentially holding, build emergency funds. First-time buyers: Aim for 20% down to avoid high ratios.

Parubets advises: “If your mortgage renewal is next year… know what that payment looks like now.” Tools like online calculators can help simulate shocks.

Looking Ahead: Will Relief Come in Time?

Equifax’s report signals no quick recovery, with renewals testing budgets through 2025 and into 2026. While rate cuts have helped some, the divide widens in Ontario and B.C., where higher costs and delinquencies persist. As Pandey concludes, sluggish growth means renewals dominate, not new demand. Policymakers may need targeted aid, like expanded first-time buyer incentives, to bridge the gap. For households, proactive planning is key amid tariffs and unemployment risks. This “test” of budgets could define Canada’s economic path—stability for some, struggle for others.