RBC Earnings Reveal Surge in Mortgage Delinquencies, with Toronto Hit Hardest
Toronto, Canada – August 27, 2025
Royal Bank of Canada (RBC), the country’s largest bank, reported a record-breaking third-quarter profit of $5.5 billion for the period ending July 31, 2025, up 21% from the previous year. However, the bank’s latest earnings report also highlighted a troubling rise in mortgage delinquencies, with Toronto emerging as the epicenter of financial strain among Canadian borrowers. The 90-day mortgage delinquency rate in the Greater Toronto Area (GTA) reached 0.39%, significantly higher than the national average of 0.30% and Vancouver’s 0.23%, underscoring the city’s unique economic challenges.
According to RBC’s data, the bank’s overall 90-day mortgage delinquency rate climbed to 31 basis points (bps) in Q3 2025, up from 29 bps in the prior quarter and 24 bps a year earlier. In Toronto, the spike is attributed to a combination of high living costs, elevated interest rates, and a slowing real estate market. Chief Risk Officer Graeme Hepworth noted that the increase is not linked to RBC’s recent acquisition of HSBC Canada’s mortgage portfolio, which he described as “high quality.” Instead, he pointed to “payment shock” from higher borrowing costs, particularly in high-cost regions like the GTA, where homeowners face significant financial pressure.
The GTA’s delinquency rate of 0.39% reflects a 42% surge in serious delinquencies (over 90 days past due) in Q3 2024 alone, with the rate soaring 170% compared to the previous year. This rapid escalation has pushed Toronto’s delinquency rate to a multi-decade high, with Equifax data indicating a 3.67-fold increase from its record low in Q3 2022. Unlike other major Canadian cities, Toronto’s real estate market is grappling with plunging sales, record-high inventory, and stagnant prices, exacerbating liquidity issues for homeowners unable to sell quickly to avoid foreclosure.
RBC’s mortgage portfolio, valued at $418 billion with an additional $38 billion in home equity lines, remains robust, with nearly two-thirds of clients boasting credit scores above 785 and only 7% of loans having a loan-to-value ratio above 80%. Despite this, the bank anticipates further stress, particularly for borrowers renewing mortgages at rates significantly higher than those secured during the low-rate environment of 2020-2022. A separate Equifax report noted that Ontario’s overall delinquency rate hit 0.24% in Q1 2025, a 71.5% increase year-over-year, with Toronto driving much of this trend.
Industry experts warn that the situation could worsen. With approximately one million Canadian mortgages set for renewal in 2025, many homeowners face steep payment increases. “The combination of high debt loads, rising interest rates, and a cooling housing market is creating a perfect storm,” said Alison Kemper, an associate professor at Toronto Metropolitan University. She highlighted systemic issues, such as a lack of affordable housing and policies favoring investors, as contributing factors.
Posts on X reflect growing public concern, with users like @ShaziGoalie noting a 39.1 bps year-over-year surge in GTA credit delinquencies, including mortgages, far outpacing the national average. Others, like @ManyBeenRinsed, pointed to the “silent depression” faced by households renewing low-rate mortgages from 2020 into the current 4% range, amplifying financial strain.
RBC remains cautiously optimistic, with Hepworth emphasizing that write-offs remain low and borrower quality is strong. However, the bank is also monitoring vulnerabilities in its condo and commercial real estate portfolios, particularly in economically challenged regions like Toronto. As Canada navigates an uncertain economic landscape, with potential trade disruptions and persistent inflation, the spike in Toronto’s mortgage delinquencies signals deeper challenges for the nation’s largest real estate market.