Insolvencies Hit Highest Level Since 2009 — Ontario mortgage delinquency surges 52%, BC up 36%, but bank CEOs say economy is ‘resilient’
Insolvencies Hit Highest Level Since 2009
— Ontario mortgage delinquency surges 52%, BC up 36%, but bank CEOs say economy is ‘resilient’
Sources: Equifax Canada, CBC News, CityNews, CFIB, RBC, TD | Analysis: HousingAI | Updated: May 28, 2026
📢 Equifax report: Insolvencies surged 18.8% YoY in Q1 2026 — highest since 2009. But RBC and TD earnings show provisions for credit losses declined, with bank executives calling the economy “impressively resilient.”
🎯 Bottom Line: Two Forces Are Pulling in Opposite Directions
Equifax Canada’s latest report shows insolvencies surged 18.8% YoY in Q1 2026 — the highest level since the 2009 global financial crisis. Homeowner insolvencies rose 11%, while non-homeowner insolvencies rose 4.7%. Ontario mortgage delinquency surged 52%, BC up 36%.
But on the same day, RBC and TD released earnings showing a different picture. RBC CEO Dave McKay said: “I am really impressed by the resilience of the Canadian economy right now. I see so many positive trends.” Both banks’ provisions for credit losses (PCL) declined quarter-over-quarter — RBC from $1.09B to $912M, TD from $1.03B to $1.0B.
These two data sets appearing simultaneously tell a nuanced story: Canadians are under pressure, but the banking system remains stable, and the economy is not collapsing. Pressure is concentrated in specific regions (Ontario, BC) and specific groups (2020-2022 buyers, investors).
I. Insolvency Data: Highest Since 2009
| Indicator | Q1 2026 | YoY Change | Insight |
|---|---|---|---|
| Total insolvencies | Record high | +18.8% | Highest since 2009 |
| Homeowner insolvencies | — | +11% | Significant homeowner stress |
| Non-homeowner insolvencies | — | +4.7% | Rising but slower |
| Avg non-mortgage debt (homeowners in insolvency) | $82,400 | +19% | Debt burden worsening |
| Avg non-mortgage debt (non-homeowners) | $43,300 | +7.7% | Up from $40,200 two years ago |
“Many consumers have reached a ‘financial inflection point.'”
“While the mortgage renewal wave is expected to slow towards the end of 2026, the transition to significantly higher interest rates continues to fuel financial impact and payment pressure. Consequently, ongoing monitoring of debts remains essential for Canadians.”
— Rebecca Oakes, VP of Advanced Analytics, Equifax Canada
II. Mortgage Delinquency: Ontario +52%, BC +36%
- National mortgage delinquency balance (90+ days): +32% YoY
- Ontario: +52% — highest in Canada
- British Columbia: +36% — second highest
- Quebec, Saskatchewan: delinquency rates declined YoY
Important context: Despite the surge, the 90+ day mortgage delinquency rate remains at just 0.22%, below pre-pandemic levels. Rebecca Oakes explains: “Consumers generally will try to protect their mortgage as long as possible, so the percentage is quite small. But the reason we focus on mortgages is because it demonstrates what the underlying financial stress is as well.”
📎 Full analysis: Ontario Mortgage Delinquency Surges 52%: GTA High-Leverage Buyers Most Affected
III. Bank Earnings: Provisions Drop, Executives Say Economy Is ‘Resilient’
“I am really impressed by the resilience of the Canadian economy right now. I see so many positive trends. Despite little activity in the real estate sector, consumers are still spending and saving, and any weakness from Canadian sectors exposed to U.S. tariffs has not spread into the broader economy.”
— RBC Q2 2026 Earnings Call, May 28, 2026
| Metric | RBC | TD |
|---|---|---|
| Q2 PCL (provisions for credit losses) | $912M (down from $1.09B) | ~$1.0B (down from $1.03B) |
| YoY change | Down 34% ($1.4B a year ago) | Down 25% ($1.34B a year ago) |
| Net income | $5.5B (+25%) | $4.3B |
| Adjusted EPS | $3.90 (beat $3.80) | $2.38 (beat $2.26) |
Canadian consumer resilience is attributed to declining interest rates, wage growth, and ongoing government support. But there are signs that some consumers are under pressure, which was expected. TD has set aside close to $500 million for PCLs, and most of that reserve is unused.
Jefferies analyst John Aiken noted: “Royal came in above expectations not just at the top of the house, but along each of its operating segments as well. However, the vast majority of the beat came from lower-than-anticipated provisions.” This means strong bank profits were partly driven by setting aside less for bad loans, not necessarily core business growth.
IV. ‘Perfect Storm’: Falling Home Values + Rising Rates + Job Pressure
Ron Butler, principal broker at Butler Mortgage, says a “perfect storm” of factors has caused the delinquency surge.
The most important factor: declining home values. From 2009 through 2023, homeowners could tap into home equity when facing financial trouble. That safety net is gone — anyone who bought between 2020 and 2022, their home in Ontario is worth significantly less than what they paid.
Higher interest rates and a weakening job market are also part of the equation: “When you combine a higher mortgage payment with more precarious employment, you get mortgage delinquencies.”
Butler noted that investors are more likely to default than owner-occupiers. He pointed to Brampton, Ontario, as an example where delinquency and foreclosure rates are high. Many investors bought properties to rent to international students, and when student numbers declined, they got into trouble.
Despite the surge, Butler said financial institutions are not yet concerned: “Even though the trend has been so dramatically up, they do not represent an unmanageable delinquency or default rate for any of the banks.”
V. Consumer Strain: 83% Cutting Essential Spending
- 59% said their income didn’t cover basic expenses (rent, food, bills)
- 83% said they’ve had to cut back on essentials, including heating and groceries
“We’re seeing more people forced to make difficult choices simply to stay on top of monthly expenses. When households begin relying on savings or credit to manage basic costs, it can quickly lead to long-term financial strain.”
— Joshua Harris, insolvency trustee and CEO
VI. Non-Mortgage Debt: Calgary, Edmonton Highest in Canada
| City | Avg Non-Mortgage Debt | National Rank |
|---|---|---|
| Calgary | ~$24,500 | Highest |
| Edmonton | ~$24,000 | 2nd highest |
Economist Moshe Lander said: “The issue isn’t just how much debt Albertans carry, but how fast it’s growing relative to income. If debt is growing at 5% a year and your income is growing at 3%, then you’re in trouble because you’ll never find a path to pay it back.”
The good news: Canadians appear to be trying to keep debt in check. Equifax data shows total consumer debt rose 3.8% to $2.66 trillion, but non-mortgage debt dropped for the first time in several quarters. Lower holiday spending at the end of 2025 translated into lower seasonal credit card balance increases, and many paid down balances during Q1.
VII. Small Business Confidence Collapses: CFIB Barometer Drops 11 Points
- CFIB Business Barometer: Dropped 11 points, falling below the 50-point threshold
- Every province and sector: Declined
- Fuel costs: 72% of businesses cited as top pressure point
- Weak consumer demand: Listed as the biggest constraint on business expansion
CFIB economist Andreea Bourgeois said: “Many small firms are stuck in a grind. Demand is weak, costs — especially fuel — are high, and conditions don’t show signs of improving. This environment is not conducive to strong orders or investment.”
For the first time this year, a higher share of employers are planning layoffs than hiring.
VIII. Conclusion: Seemingly Contradictory Data Point to One Reality
🎯 HousingAI Core Judgment
Two sets of data appearing on the same day are not contradictory — they are two sides of the same reality.
On one side, pressure is building: Insolvencies hit highest level since 2009; Ontario and BC mortgage delinquency surged; 83% are cutting essential spending. This isn’t a single factor — falling home values, rising rates, and job market pressure are all converging.
On the other side, the system remains stable: RBC and TD provisions for credit losses declined; net income beat expectations; bank executives expressed confidence. Over 99% of mortgages are still being paid on time. Pressure is concentrated in specific regions (Ontario, BC) and specific groups (2020-2022 buyers, investors).
For homeowners facing renewal: plan ahead. For investors: cash flow is the only thing that matters. For policymakers: this is a warning signal worth close attention — but Canada’s banking system still has ample buffers to absorb the shock.
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⚠️ This report is for informational purposes only and does not constitute investment or legal advice. Please consult licensed professionals for specific financial decisions.