Despite the national trend of increasing mortgage delinquencies, both Montreal and Vancouver have managed to buck this trend. In Q1 2023, Montreal reported a delinquency rate of 0.09%, nearly a third of its rate at the beginning of the 2020s. Similarly, Vancouver recorded a delinquency rate of 0.08%, almost half of its previous levels. These markets have maintained relative liquidity even amidst rising interest rates.

Although Toronto and Canada as a whole do not currently report significantly high delinquency rates, the rising number of individuals falling behind on mortgage payments is concerning. This trend is surprising, considering lenders’ willingness to grant extended repayment lengths and the continuous surge in housing prices. These factors should act as strong mitigating factors; however, cracks are appearing, even in Toronto, which is known for its position as one of the world’s largest real estate bubbles.

The increase in mortgage delinquencies in Toronto reflects a larger trend observed across Canada, indicating potential challenges within the real estate market. While Montreal and Vancouver have managed to maintain relatively low delinquency rates, Toronto’s recent uptick in delinquencies raises concerns, particularly considering the city’s prominent real estate bubble. As the normalization of delinquency rates continues, it is crucial to closely monitor the impact on the Toronto housing market and the broader Canadian economy. Adequate measures and proactive steps may be required to ensure stability and sustainable growth in the real estate sector going forward.