Canada’s consumer debt reached $2.65 trillion in the fourth quarter of 2025, a 3.13% increase year-over-year, driven by a $50.26 billion rise in mortgage balances and a 4.50% annual increase in non-mortgage debt, according to a new report from Equifax Canada.
The data, released Tuesday, reveals a widening gap in financial health across the country, with older Canadians demonstrating resilience while younger consumers and those in Ontario and Western provinces show increasing financial strain. Missed payments on non-mortgage debt hit a peak at the end of December, with delinquencies of 90 days or more rising from 1.64% to 1.73% – a 5.43% year-over-year increase.
Consumers aged 26 to 35 experienced the largest increase in credit-related financial difficulties, posting the highest delinquency rate at 2.55% and the largest year-over-year decline in credit health, up 8.39%.
A regional divide is becoming increasingly apparent. Ontario saw the fastest acceleration in non-mortgage delinquencies, up 10.31% compared to the fourth quarter of 2024. Alberta continues to be a “geographic hotspot,” with the highest overall rate of missed payments on non-mortgage balances at 2.45%. Conversely, regions with more affordable housing, such as Prince Edward Island, Nova Scotia, New Brunswick, and Quebec, saw relative declines in their delinquency rates.
“Our data continues to show a clear divide in how consumers in certain regions and demographic groups are managing income instability and high cost-of-living stress,” said Rebecca Oakes, Vice President of Advanced Analytics at Equifax Canada. “The solid news is that, in most cases, Canadians appear to be navigating these credit challenges responsibly, showing less spending on credit cards during the holidays this year.”
Credit card spending during the 2025 holiday period slowed compared to previous years. Inflation-adjusted credit card spending fell 0.7% year-over-year to $2,297, with the most significant declines observed in Western Canada (-4.1% in the Territories, -3.0% in Alberta, and -2.2% in British Columbia). Younger consumers (aged 26 to 35) led the way in curbing holiday spending, reducing it by 2.0%, while older consumers (46 and over) continued to increase their spending.
Despite this caution, credit card balances climbed to a record high of $131 billion, a 4.04% increase. “The fourth quarter is typically when we see the strongest growth in credit card balances, as well as missed payments emerging in January,” Oakes added. “The pullback in spending helped to curb some of the holiday effect, with approximately 30,000 fewer consumers missing a payment in January compared to last year.”
Lenders are showing signs of tightening access to credit for higher-risk borrowers. Non-mortgage debt levels for high-risk consumers (credit scores of 320 to 580) remained stagnant in the fourth quarter, while non-risk consumers (credit scores of 751 to 880) saw their average non-mortgage debt increase by 6.1% to $20,818. “Lenders appear to be reacting to higher credit losses, driven by economic hardship and increasing fraud in Canada, by adjusting their credit approval policies as a risk mitigation measure,” Oakes stated. “Trying to maintain a good credit score to ensure access to credit is a useful reminder for consumers.”
Mortgage renewals continued to dominate the mortgage market in the fourth quarter, with total mortgage debt reaching $1.95 trillion, a 2.6% year-over-year increase. While the Bank of Canada’s policy interest rate of 2.25% offered some relief to homeowners, housing affordability remained challenging, particularly in high-priced regions like Ontario and British Columbia. Payment shocks from mortgage renewals remained a concern, leading to an increase in lender switching as consumers sought the best rates and lowest monthly payments. The high mortgage balance remained a significant barrier to entry, with the average new mortgage increasing by 4.1% to $363,778. This burden was even heavier for first-time homebuyers, who saw the average amount of their new mortgage increase by 5% to $441,301.
“The stabilization of interest rates appears to be having a positive impact on homeowners and the Canadian mortgage industry, but affordability remains a concern in overheated housing markets,” Oakes concluded. “We continue to see an increase in missed mortgage payments on higher-value mortgages in Ontario, as payment levels are visibly too high for some consumers following renewals.”
