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April 15, 2026 | Canadian Bank Regulator Cites Rising Loan Defaults as Number One Risk
Danielle Park
As of January 2026, 3.1 million Canadian mortgages, or 52 percent of all outstanding, were due to renew by the end of 2027, according to the latest report from the Office of the Superintendent of Financial Institutions (OSFI).
Of these renewals, 1.3 million are fixed-rate mortgages or variable-rate mortgages with fixed payments that will be renewing for the first time since 2021 and 2022, when interest rates were lower. This group of borrowers will experience “material” monthly payment increases, OSFI warned in yesterday’s report.
The regulator now ranks rising residential mortgage loan arrears, or defaults, as the number one risk facing Canadian banks over the next two years. See, Mortgage risk now the number one threat to Canada’s financial system, regulator says, with defaults predicted to rise:
At the same time, economic uncertainty has led to more home listings and a decline in sales and prices, particularly in Toronto and Vancouver where there are a lot of condominiums.
“The near standstill in new condo activity and condo construction builds,” OSFI wrote, “is straining builders and has negative implications for the labour force they employ.”
Another concern is that many presale buyers will struggle to close as borrowers may need a larger down payment to qualify for their mortgage.
The number two risk to banks is what OSFI calls “nonbank financial institution risk,” coming, in part, from lending to private equity and other nonbank entities, according to the report
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Danielle Park April 15th, 2026
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