Note: All charts and graphs are interactive so you can move you mouse along them to see different dates etc.. . Also, sources are at the bottom of the blog post incase you want to double check anything or explore further.

If tariffs, wild fires, gas prices, the war, the other war and inflation were not enough to send you running to the hills, perhaps last weeks mass reporting of record breaking Canadian insolvencies may have tipped the scale.   If you follow the news or are on any social media, reports last week of this most recent thing to worry about were hard to miss.  

True is that filings are at levels not seen since the financial crisis.  While that fact makes for a catchy headline it begs the question: So what?  Or put another way, what does that mean and do I need to care about this?

I think the reasonable answer requires us to look at two comparisons that seems to have been skipped in the current the coverage.  The first is against Canada's own history - where do these levels fit-in historically?  The second is against other countries -  are we outliers? 

The headline, and the rate underneath it

The Office of the Superintendent of Bankruptcy recorded 37,523 consumer insolvencies in the second quarter of 2026, a 6.9 percent increase over the same quarter of 2025 and the highest quarterly figure since 2009. That is accurate and it is the number driving the coverage.

It is also a raw count, and Canada's population has grown by more than 20 percent since 2009. The measure that controls for this is the filing rate per 1,000 adults, which the OSB publishes directly.

On that basis, 2024 came in at 4.2 filings per 1,000 adults nationally and 4.0 in Ontario. The 2009 peak was 5.8 nationally and 6.6 in Ontario. The 2019 reading, in what nobody described as a crisis, was 4.6 nationally. The Canadian Association of Insolvency and Restructuring Professionals put the rate for the twelve months to June 2026 at 4.1 per 1,000 adults, which is to say roughly flat against 2024 even as the raw count climbed.

Filings are rising. The rate at which Canadians reach a formal breaking point has been close to stable, because the adult population has been growing at a similar pace.

What people are filing has changed completely

There is a second problem with comparing 2026 to 2009, and it is more fundamental. A filing today is not the same legal event it was seventeen years ago.

In 2009, bankruptcies ran at 4.5 per 1,000 adults and consumer proposals at 1.4. By 2024 those figures had reversed almost exactly: bankruptcies at 0.9 and proposals at 3.4. A consumer proposal is a negotiated repayment plan, typically running up to five years, in which the debtor keeps their assets and pays back a portion of what is owed. It is a restructuring, not a liquidation.

Research published in Canadian Public Policy by Saul Schwartz of Carleton University and Stephanie Ben-Ishai of Osgoode Hall Law School examined this shift directly. Proposals rose from 23 percent of Canadian insolvencies in 2009 to 79 percent in 2024, and the authors found that changes in the average debtor's debts, assets and income do not account for the increase. Earlier work by Jason Allen and Kiana Basiri, also in Canadian Public Policy, showed that the 2009 amendments to the Bankruptcy and Insolvency Act themselves redirected filers toward the proposal route, with effects that varied by region depending on provincial asset exemptions and homeownership rates.

So when a headline compares 2026 filings to 2009 filings, it is comparing a population that is overwhelmingly entering multi-year repayment plans to a population that was overwhelmingly liquidating. The comparison is not wrong so much as it is measuring two different things.

Where Canada actually stands internationally

That is the reassuring half. Here is the other half.

The Bank for International Settlements tracks household credit on a consistent basis across countries. As of the fourth quarter of 2025, Canadian household debt stood at 100.6 percent of GDP. The United Kingdom, the next highest G7 country, was at 73.6 percent. The United States was at 68.1 percent. Germany was at 48.9 percent. Across all reporting countries the figure was 59.8 percent.

The International Monetary Fund said the same thing in plainer language in its 2025 Financial System Stability Assessment for Canada: "Canada's household debt-to-GDP ratio is the highest among G7 economies." The accompanying technical note recorded household debt above 100 percent of GDP and above 170 percent of disposable income, with residential mortgages making up 74 percent of household credit liabilities.

Debt levels alone can be misleading, because a large mortgage at 2 percent is a different animal than the same mortgage at 6 percent. The measure that captures the burden rather than the stock is the debt service ratio, the share of household income already committed to principal and interest.

Canada sits at 14.0 percent on the BIS measure, third among the countries shown, behind Norway and Australia. American households sit at 8.0 percent. Statistics Canada's own version of the ratio, which is calculated slightly differently, reached 14.75 percent in the first quarter of 2026.

Put simply, close to one dollar in every seven that Canadian households have available to spend is spoken for before anything else happens. That is not a forecast or a projection. It is a current condition, and it is roughly 75 percent higher than the equivalent burden carried by American households.

The long view on Canada's own numbers

Canada did not arrive here quickly, and the trajectory is worth seeing in full.

In the first quarter of 1996, Canadian households owed about $1.05 for every dollar of disposable income. By the first quarter of 2026 they owed $1.80. Statistics Canada reported that the ratio rose for a sixth consecutive quarter to 179.6 percent, with household credit market debt reaching $3,253.4 billion. The household saving rate fell to 3.5 percent over the same quarter, down from 4.4 percent, as spending growth outpaced income growth.

The ratio remains below its 2022 peak, which is a genuine improvement. But the thirty-year direction of travel is unambiguous, and the recent turn is upward again.

Against that leverage, the actual delinquency record has been comparatively mild.

The Canadian Bankers Association has tracked mortgages three or more months in arrears since 1995. The series peaked at 0.65 percent in early 1996. It reached 0.45 percent during the financial crisis. It bottomed at 0.14 percent in mid-2022, the lowest reading on record. As of May 2026 it stands at 0.29 percent nationally and 0.32 percent in Ontario.

Two things are true at once. Arrears have roughly doubled off the low, the count of mortgages in arrears is up 27.2 percent year over year, and Ontario has moved above the national rate, something that in this series has happened only twice before, in 1991 through 1996 and in 2005 through 2009. At the same time, the absolute level is less than half the mid-1990s peak, and more than 99 percent of Canadian mortgage holders are current.

One important caveat belongs with that chart. The CBA series covers chartered banks only. Canada Mortgage and Housing Corporation reports that mortgage investment entities, meaning private and alternative lenders, carried a 90-day delinquency rate of 1.96 percent in the third quarter of 2025, against 0.24 percent at chartered banks and 0.15 percent at credit unions. Borrowers who fall behind frequently are not renewed at a bank and migrate to the private channel, where the distress is roughly eight times more concentrated and far less visible in the published headline.

The local picture

Provincial and national averages hide a great deal. The OSB publishes filings by economic region, which allows a reasonably direct look at our markets. Waterloo Region, Guelph and Wellington County fall inside the Kitchener-Waterloo-Barrie region. Brantford and Brant County fall inside the Hamilton-Niagara Peninsula region.

The first thing that stands out is that Southwestern Ontario files at a higher rate than Toronto does. In 2024, the London region recorded 4.5 filings per 1,000 adults, Hamilton-Niagara 4.3 and Windsor-Sarnia 4.2, against 3.4 in Toronto and an Ontario average of 4.0. Kitchener-Waterloo-Barrie sat at 3.8, below the provincial figure.

The second thing is that the direction of travel differs from the levels.

Over the four quarters to 30 June 2026, compared with the four quarters before, every Ontario region examined recorded an increase. Windsor-Sarnia rose 9.3 percent and Toronto 8.1 percent. The three regions covering our markets rose more slowly: London 6.9 percent, Hamilton-Niagara 5.5 percent and Kitchener-Waterloo-Barrie 4.8 percent. London therefore has the highest level and a middling rate of increase, while Kitchener-Waterloo-Barrie has the lowest level of the three and the slowest increase.

These are wide regions, and the Kitchener-Waterloo-Barrie boundary in particular takes in Simcoe County and Barrie alongside Waterloo Region and Guelph. The figures should be read as directional rather than as a precise reading of any one city.

The Bigger Picture

What actually drives this

The most useful research on this question is not about interest rates. In a staff analytical paper published in March 2026, Bank of Canada economists Thomas Pugh, Taylor Webley and Tao Wang examined the macroeconomic drivers of Canadian mortgage arrears and found that the labour market is the dominant force. A one percentage point rise in unemployment raises arrears by roughly 0.1 percentage points after about a year. A 100 basis point rise in mortgage rates moves arrears by only 3 to 5 basis points over two years.

Work commissioned by the OSB from David Fieldhouse, Igor Livshits and James MacGee reached a compatible conclusion about the last cycle, attributing 40 to 60 percent of the entire 2008 to 2011 rise in Canadian filings to labour market deterioration among filers. The OSB's own debtor survey is consistent: loss of income is the most commonly cited cause of insolvency, at 45 percent of filers.

This matters locally. Ontario's unemployment rate was 6.8 percent in July 2026, the lowest since July 2024, and the province added 52,000 jobs that month. Waterloo Region's own rate has been running well above the national average, reflecting a manufacturing base exposed to United States trade policy. The provincial number is the encouraging signal. The regional one is the reason to keep watching.

Equity is the release valve

The same Bank of Canada paper found that strong house price growth is negatively correlated with arrears, which the authors interpret as equity providing households with a buffer. Research by Andrew Linn and Ronan Lyons published in the Journal of Real Estate Finance and Economics, covering 2.3 million mortgages across five European countries, found that negative equity on its own is a relatively small contributor to default but that it substantially amplifies a household's sensitivity to unemployment and interest rate shocks.

That is the mechanism to hold onto. Falling prices do not cause defaults by themselves. They remove the option that has quietly kept many Canadian homeowners out of the insolvency statistics for a decade, which is the ability to refinance, draw on equity, or sell into a rising market rather than file.

The Bank of Canada reported in its 2026 Financial Stability Report that the price of a typical Canadian home has fallen about 5 percent over twelve months and about 20 percent since prices peaked in 2022, and noted that lower prices "increase the risk that some households could fall behind on their payments."

Renewals, in proportion

The renewal wave has been discussed for three years, generally in more alarming terms than the data supported. The current position is reasonably clear. The Bank of Canada reports that the last of the five-year fixed-payment pandemic mortgages will renew over the next twelve months, that this group represents about 12 percent of all outstanding mortgages, and that they face an average payment increase of about 15 percent. More than 90 percent of borrowers who renewed in the past year did so at rates below their original qualifying rate. Senior Deputy Governor Carolyn Rogers stated in May that the Bank expects the risk "to have fully passed by the second half of 2027."

The Office of the Superintendent of Financial Institutions is somewhat more cautious, noting that 3.1 million mortgages, or 52 percent of the total, will renew by the end of 2027, and Superintendent Peter Routledge has estimated that 5 to 10 percent of renewing borrowers could face significant payment pressure. Both readings can be right. The wave is smaller than feared, and the tail within it is real and concentrated.

Who is actually in trouble

One finding deserves emphasis because it cuts against intuition. According to the OSB's Canadian Consumer Debtor Profile, only 14 percent of Canadians who filed an insolvency in 2024 owned a home. Ontario's homeownership rate is 68.4 percent. Homeowners are therefore roughly five times under-represented among filers.

The typical filer had median household assets of $15,142, median liabilities of $53,997, median monthly income of $3,089 against median monthly expenses of $3,264, and an average age of 46. That is a household running a $175 monthly deficit with almost nothing to sell.

Part of the explanation is the release valve described above. A homeowner in difficulty has options that a renter does not, and the research bears this out. Work by Karen Duncan, Janet Fast and Phyllis Johnson, commissioned by the OSB, found that 17 percent of bankruptcy filers held mortgage debt against 32 percent of proposal filers, concluding that where there was home equity to preserve, debtors filed proposals rather than bankruptcies. Equifax data for the first quarter of 2026 shows the same mechanism operating today, with more than 90 percent of mortgage holders entering insolvency choosing a proposal.

The correct reading is not that homeowners are immune. It is that financial hardship in Canada is concentrated among low-wealth, low-liquidity households, and that those households are disproportionately renters. Tenure is not the cause. It is the clearest available proxy for the thing that is.

Conclusion

Three things are worth carrying away from all of this.

• The first is that Canada's debt problem is a level problem more than an event. At 100.6 percent of GDP and 179.6 percent of disposable income, with nearly one dollar in seven of income committed to debt service, the balance sheet is stretched by any international comparison. That condition does not resolve itself quickly, and it is the reason both the IMF and OSFI continue to rank household leverage as a leading domestic vulnerability.
• The second is that the current distress, measured properly, is not historically extreme. The insolvency rate per capita is close to where it sat before the pandemic and well below 2009. Mortgage arrears are less than half their mid-1990s peak. Both are rising, and the composition of filings has shifted toward the more severe outcome in recent quarters, which is worth monitoring. Neither is at a level that has historically preceded a disorderly correction.
• The third is that the indicator to watch is employment, not the Bank of Canada. The research is consistent on this point, and it is the variable most likely to determine whether Waterloo Region, Guelph, Brantford and London look materially different in a year. Ontario's provincial unemployment rate is currently improving. Our regional manufacturing exposure means the local figure can move independently of it, and generally has.

Terry Riddoch

If you would like to talk through how any of this applies to a building you own or one you are considering, I am always happy to walk through the numbers.

Terry Riddoch
Real Estate Broker - Multifamily and Investment Properties, Ontario

Phone: 519 591 1725
Email: [email protected]
Web:www.terryriddoch.ca

Sources

Government of Canada and the Bank of Canada

• Office of the Superintendent of Bankruptcy Canada, Insolvency Statistics in Canada, Second Quarter 2026.
  Quarterly filing volumes, and Table 5, insolvencies filed by consumers by economic region.

• Office of the Superintendent of Bankruptcy Canada, Insolvency Statistics in Canada, 2025.
  Annual totals for Canada and Ontario, split between bankruptcies and consumer proposals.

• Office of the Superintendent of Bankruptcy Canada, Canadian Consumer Debtor Profile 2024.
  Published 27 November 2025, covering all 137,295 consumer filings of 2024. Source of the homeownership, income, assets, liabilities and age figures.

• Office of the Superintendent of Bankruptcy Canada, Annual Consumer Insolvency Rates by Province and Economic Region, 2020 to 2024.
  Filings per 1,000 population aged 18 and over. Earlier editions covering 1987 forward are linked from the Annual Insolvency Rates index.

• Bank of Canada, Financial Stability Report 2026, Households.
  Published May 2026. Source of the arrears comparison between mortgage holders and non-mortgage holders, the remaining renewal cohort, and the house price figures.

• Bank of Canada, Release of the Financial Stability Report, opening statement, 28 May 2026.
  Joint statement by Senior Deputy Governor Carolyn Rogers and Deputy Governor Toni Gravelle. Source of the quotation on renewal risk passing by the second half of 2027.

• Pugh, T. M., Wang, T. and Webley, T. (2026), Examining the Macro Drivers of Mortgage Arrears in Canada, Bank of Canada Staff Analytical Paper 2026-12, March 2026.
  Source of the finding that unemployment moves arrears far more than mortgage rates do, and that house price growth is negatively correlated with arrears.

• Statistics Canada, National balance sheet and financial flow accounts, first quarter 2026, The Daily, 12 June 2026.
  Source of the debt to disposable income ratio, the debt service ratio and the household saving rate.

• Statistics Canada, Labour Force Survey, July 2026, The Daily, 7 August 2026.
  Source of the national, provincial and youth unemployment rates.

• Statistics Canada, Homeownership rate by province and territory, 2011 to 2021, Census of Population.
  Source of the Ontario homeownership rate of 68.4 percent.

• Office of the Superintendent of Financial Institutions, Annual Risk Outlook, Fiscal Year 2026-2027, 14 April 2026.
  Source of the renewal volumes to the end of 2027 and the commentary on condominium values.

• Canada Mortgage and Housing Corporation, Residential Mortgage Industry Report, Spring 2026.
  Source of the delinquency rates by lender type, including mortgage investment entities.

International institutions

• International Monetary Fund, Canada: Financial System Stability Assessment, IMF Country Report No. 2025/220, August 2025.
  Source of the statement that Canada's household debt to GDP ratio is the highest in the G7, and of the adverse scenario assumptions.

• Bank for International Settlements, Credit to the non-financial sector.
  Source of household credit as a share of GDP across countries, fourth quarter 2025.

• Bank for International Settlements, Debt service ratios.
  Source of the household debt service ratio comparison, fourth quarter 2025.

• Federal Reserve Bank of St. Louis, Total Credit to Households and Non-Profit Institutions Serving Households, Adjusted for Breaks, for Canada, series CRDQCAAHABIS.
  The BIS Canadian household credit series in a directly downloadable form.

Industry and credit bureau data

• Canadian Bankers Association, Mortgages in Arrears.
  Monthly count and rate of residential mortgages three or more months in arrears, by province, back to January 1995. Covers the reporting chartered banks only.

• Equifax Canada, The Resilient North, Market Pulse Consumer Credit Trends and Insights, first quarter 2026, released 26 May 2026.
  Source of the insolvency growth comparison between homeowners and non-homeowners, and of the share of mortgage holders choosing a consumer proposal.

• Canadian Association of Insolvency and Restructuring Professionals, Q2 2026 Canadian Insolvency Statistics, 14 August 2026.
  Source of the filing rate of 4.1 per 1,000 adults for the twelve months to 30 June 2026.

Peer-reviewed and commissioned research

• Schwartz, S. and Ben-Ishai, S. (2025), "Tilting the Playing Field Away from the Discharge of Debts: The Case of Consumer Proposals in Canada," Canadian Public Policy 51(2).
  Source of the finding that the shift from bankruptcy to consumer proposal is not explained by changes in debtor characteristics. A free version is available through the Osgoode Digital Commons.

• Allen, J. and Basiri, K. (2018), "Impact of Bankruptcy Reform on Consumer Insolvency Choice," Canadian Public Policy 44(2), pages 100 to 111.
  The published article is behind a subscription. The freely available working paper version is Bank of Canada Staff Working Paper 2016-26, published under the title The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit.

• Linn, A. and Lyons, R. C. (2020), "Three Triggers? Negative Equity, Income Shocks and Institutions as Determinants of Mortgage Default," Journal of Real Estate Finance and Economics 61(4), pages 549 to 575.
  Source of the finding that negative equity amplifies sensitivity to income and rate shocks rather than causing default on its own.

• Fieldhouse, D., Livshits, I. and MacGee, J. (2012), Income Loss and Bankruptcies over the Business Cycle, University of Western Ontario, commissioned by the Office of the Superintendent of Bankruptcy.
  Source of the estimate attributing 40 to 60 percent of the 2008 to 2011 rise in filings to labour market deterioration.

• Duncan, K. A., Fast, J. E. and Johnson, P. (2012), Profiles of Canadian Households Undertaking Insolvency Procedures Pre- and Post-Recession, commissioned by the Office of the Superintendent of Bankruptcy.
  Source of the comparison between the share of bankruptcy filers and proposal filers holding mortgage debt.