Mortgage debt soars while starter homes get out of reach for many Canadians

In addition to higher mortgage costs, new homebuyers are also struggling with the cost of buying starter homes in today’s housing market, a new report shows.

Canadians took on more mortgage debt last year, with the total debt hovering close to $2 trillion in 2025, a report by Equifax Canada shows.

The country is in the middle of a mortgage renewal wave, with the Canada Mortgage and Housing Corporation estimating that at least 1.5 million households had already renewed their mortgage by the end of 2025 and a million more set to do so in 2026.

Mortgage renewals continued to dominate the mortgage market in the fourth quarter, with total mortgage debt reaching $1.95 trillion, the report by Equifax Canada found.

This is an increase of 2.6 per cent compared to the same time last year.

“Interest rate stabilization is appearing to have a positive impact on homeowners and the Canadian mortgage industry, however in hotter housing markets, affordability remains a concern,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.

“High mortgage balance remained a significant barrier to entry, with average new loan amounts climbing 4.1 per cent to $363,778. This burden was even heavier on first-time homebuyers, who saw their average new loan size grow 5 per cent to reach $441,301,” the report said.

Many households experienced “payment shock,” or a sudden increase in their monthly mortgage payments due to renewal. This prompted many to switch lenders, the report added.

“We continue to see rising missed payments on higher value mortgages in Ontario as post renewal payment levels prove too high for some consumers,” Oakes added.