Ontario Mortgage Arrears Are Still Rising — What to Do Before Your Renewal

By Naveen Vadlamudi, Real Estate Broker, Royal Canadian Realty, Brokerage

Ontario mortgage arrears are still rising, and the increase is concentrated where it hurts most: renewals. This post explains what the numbers mean, why they are moving, and what to do before your renewal arrives.

What arrears actually are

Arrears means behind, not lost. A mortgage in arrears is one where the borrower has missed a payment, usually by 90 days or more. It is a warning, not a verdict.

That distinction matters. A borrower in arrears is not a borrower who has lost the home. The home is still theirs, the mortgage is still theirs, and there is still time to fix it.

But the number is moving in the wrong direction. Arrears in Ontario have been rising for several quarters, and the increase is not confined to one city or one lender. It is broad, and it is steady.

Why arrears are rising now

The reason is not complicated. Payments went up, incomes did not keep pace, and the gap is showing up in the arrears data.

A borrower who locked in at 2.50% and now faces 5.50% is paying hundreds more a month for the same home. That is the arithmetic of the renewal, and it is the same arithmetic that drives arrears.

Add the cost of everything else — groceries, insurance, property tax, utilities — and the margin disappears. Arrears are what happens when the margin is gone.

What arrears mean for the market

Arrears are not a crash. They are a signal. A rising arrears rate tells you that more households are under strain, and that strain will show up in listings, in prices, and in negotiating power.

For a buyer, that signal matters. More strain means more sellers who need to sell, and more room to negotiate on price and terms.

For a seller, the signal is a warning. If you need to sell, sell before you have to. A voluntary sale is always better than a forced one.

What to do before your renewal

Start early, and start with the lender. The worst time to talk to your lender is after you have missed a payment. The best time is months before renewal, when the options are widest.

Ask for the renewal offer in writing. Ask what a different amortization would do. Ask whether a lump-sum payment would help. Ask what happens if you cannot make the new payment. Lenders have answers to all of these questions, and they would rather give them early than late.

Then look at the alternatives. A different lender may offer a better rate. A broker can compare the market. And if the numbers do not work, say so — before the renewal date, not after it.

If you are already behind, do not wait. Call the lender, explain the situation, and ask about a payment plan. The lender's job is to get paid, not to take the house. A plan that keeps payments flowing is in everyone's interest.

Further reading: Waiting for Funds: When to Start Looking for a Home in the GTA and Selling a Home in Toronto: Year-End Downsizer Guide.

—

Naveen Vadlamudi is a Real Estate Broker with Royal Canadian Realty, Brokerage, in Markham, Ontario. If your renewal is coming up, or you want to know what your home is worth before you decide, call or text (416) 837-9696 or visit gtarealstar.ca.

Call or text (416) 837-9696 or visit gtarealstar.ca.