Short answer: mortgage arrears are payments three or more months overdue. At Canadian banks they are rare but rising: 14,270 mortgages (0.29%) were in arrears in July 2026, up 24.8% in a year (Canadian Bankers Association). Once a mortgage is in default, the lender's next step depends on the borrower's current position and the province.
Key takeaways
- The national bank arrears rate reached 0.29% in July 2026, the highest since 2016, and the number of mortgages in arrears is nearly double its 2022 low.
- Ontario holds about 44% of the bank mortgages in the data but just over half of those in arrears, and its count rose 49.9% in a year.
- In default, the lender and its counsel need a current address for service, the registrations against the property, other property, income and banking, and any insolvency filing.
- Enforcement is provincial: power of sale in Ontario, court foreclosure in British Columbia and Alberta, hypothecary rights in Quebec. Whether a shortfall can be claimed from the borrower varies too.
What do the latest mortgage arrears figures show?
Arrears are still low by historical standards, but they have been rising since mid-2022. The Canadian Bankers Association (CBA) counts a mortgage as in arrears when payments are three or more months overdue, and its July 2026 figures put the national rate at 0.29%, up from 0.23% a year earlier and 0.14% at the 2022 low.
| Region (bank mortgages) | In arrears, July 2026 | Arrears rate (July 2025) | Change in count, year over year |
|---|---|---|---|
| Canada | 14,270 | 0.29% (0.23%) | Up 24.8% |
| Ontario | 7,268 | 0.34% (0.22%) | Up 49.9% |
| British Columbia | 1,761 | 0.26% (0.21%) | Up 22.6% |
| Quebec | 1,728 | 0.19% (0.18%) | Up 2.7% |
| Alberta | 1,567 | 0.28% (0.26%) | Up 5.5% |
| Atlantic provinces | 1,006 | 0.30% (0.28%) | Up 8.5% |
| Saskatchewan | 547 | 0.46% (0.54%) | Down 17.6% |
| Manitoba | 393 | 0.34% (0.33%) | Up 1.6% |
Source: Canadian Bankers Association, Number of Residential Mortgages in Arrears, month ended July 31, 2026 (CBA update of September 25, 2026). The data covers nine banks, including the six largest. Yukon is counted in British Columbia, and the Northwest Territories and Nunavut in Alberta. Year-over-year changes are calculated from the same tables.
Ontario stands out. It holds about 44% of the bank mortgages in the data but 51% of those in arrears. The CBA's commentary on the same figures notes that arrears have historically followed the job market, citing Bank of Canada research that a one-point rise in unemployment adds about 0.1 points to the arrears rate, roughly a year later. It also notes that banks work with borrowers in difficulty on options such as lump-sum payments or a longer amortization.
What does a lender need to know about a borrower in default?
A current picture of the borrower, not the one on the original application. Before a notice goes out or a claim is issued, these questions shape the file.
- Where can the borrower be served? In Ontario, a notice of sale is generally given by personal service or by registered mail to the borrower's usual or last known address (Mortgages Act, s. 33). A borrower who has moved, or owns other property, may not live at the mortgaged address, and a current address avoids delay and later disputes.
- Who else has an interest in the property? Second mortgages, writs of execution, construction liens and Crown liens affect who must receive notice and how much of the sale proceeds reach the lender. Ontario requires notice to everyone shown on the parcel register and the execution index, and to any Crown authority whose lien the lender has written notice of (s. 31).
- Does the borrower own other property? Other real property, including property held jointly or with a spouse, matters if the sale leaves a shortfall. So do mortgage interests the borrower holds, such as a vendor take-back mortgage on a property they sold.
- Is there employment income, rent or banking? After judgment, wages, bank accounts and rents are the usual subjects of garnishment. Knowing the current employer and banking relationships helps counsel judge whether a shortfall claim is realistic.
- Are there business interests or other people liable? Guarantors, co-borrowers and companies the borrower controls can change the picture. Our investigators often find business interests that link a borrower to other companies and co-debtors.
- Which other creditors are already in line? Judgments, collection accounts, tax liens and secured borrowing show whether a shortfall claim would be competing with other creditors.
Notices and court documents only work if they reach the borrower at a current address.
Has the borrower filed a proposal or bankruptcy?
Check before each step, not just at the start. Under the federal Bankruptcy and Insolvency Act, a notice of intention to make a proposal, a proposal or a bankruptcy triggers a stay of proceedings (sections 69 to 69.3). How the stay affects a secured lender depends on the type of filing and on the steps taken before it, so counsel will want the date and type of any filing early.
The Office of the Superintendent of Bankruptcy's insolvency records search shows bankruptcies and proposals. A filing also changes the shortfall question: a claim that made sense against a working borrower may become a claim in the insolvency instead.
How does mortgage enforcement differ by province?
Significantly. Ontario lenders usually sell under a power of sale in the mortgage, British Columbia and Alberta run foreclosure through the courts, and Quebec uses the hypothecary rights in its Civil Code. The route affects timing, cost and whether a shortfall can be claimed from the borrower. This is a general summary of four provinces, not a full statement of the law.
| Province | Usual route | Key notice or court step | Shortfall against the borrower |
|---|---|---|---|
| Ontario | Sale by the lender under the mortgage's power of sale, following Part III of the Mortgages Act | Notice only after 15 days' default; no sale for at least 35 days after notice (s. 32) | The lender can generally sue the borrower on the covenant to pay, and any guarantor on the guarantee |
| British Columbia | Court foreclosure started by petition (Supreme Court Civil Rules, Rule 21-7) | Everyone whose interest is to be extinguished is named; the court can set a redemption period and order a sale | The court can give judgment for the amount due, and anyone liable for the debt can be joined |
| Alberta | Court foreclosure; the order nisi directs that the land be offered for sale (Law of Property Act, s. 40) | Redemption period generally 6 months, or 1 year for farm land (s. 41) | On many mortgages given by individuals, recourse is limited to the land; not for corporate borrowers or high-ratio insured mortgages (ss. 40, 43) |
| Quebec | Hypothecary rights: taking possession to administer, taking in payment, sale by the creditor or sale under judicial authority (Civil Code, art. 2748) | Prior notice served and registered (art. 2757); 60 days to surrender an immovable (art. 2758) | The creditor keeps its personal right of action alongside the hypothecary rights (art. 2748) |
Borrowers can often still cure the default. In Ontario, section 22 of the Mortgages Act lets a borrower pay the arrears and the lender's expenses before sale and be relieved of the default. Other provinces and the territories have their own statutes and court rules, and the mortgage terms matter too, so confirm the route with counsel in the province where the property is located.
When is a shortfall worth pursuing?
When the borrower has something a judgment could reach. If the sale covers the mortgage, costs and anything ranked ahead, the file ends there. If it doesn't, the lender decides whether a claim against the borrower, and any guarantor, is worth the cost.
That decision turns on the same facts as the start of the file, updated. Does the borrower own other property with equity after registered mortgages and executions? Is there a current employer or other income? Are there bank accounts, rents or business interests? Is an insolvency filing likely? In Alberta, the first question is whether a shortfall claim is available at all.
Timing matters as well. Months can pass between default and sale, and the borrower's job, address and property can change, so refresh the borrower's information before deciding on a deficiency claim. For more on how reports fit each remedy, see credit reports in mortgage enforcement.
How Quality Credit Reporting can help
Quality Credit Reporting is a licensed credit reporting agency and has prepared investigative credit reports for businesses in Canada and the U.S. since 1992. We prepare our Debtor Status Report for financial institutions and the law firms that represent them. It is designed to locate the debtor for service, identify assets that could address a deficiency, and identify bank accounts and wages for garnishment, where that information is available. It covers real property, mortgage interests including vendor take-back mortgages, personal property and motor vehicles, business interests, bank accounts, rents and wages. A specific investigator prepares each report and confirms findings with the institutions and registries that hold them. Reports are prepared for creditors with a legitimate business need and the authority the law requires. You can request a sample report to see the format.
Frequently asked questions
What does "in arrears" mean for a Canadian mortgage?
In the Canadian Bankers Association's statistics, a mortgage is in arrears when payments are three or more months overdue. By that measure, 0.29% of the bank mortgages in its data were in arrears in July 2026. Default under the mortgage terms can occur much earlier.
How long does a power of sale take in Ontario?
The Mortgages Act sets minimums rather than a total. A notice of sale can be given only after the default has continued for at least 15 days, and the property can't be sold until at least 35 days after notice. Actual timing depends on the mortgage terms, service, whether the borrower cures the default, possession and the market.
Can a lender claim a shortfall after the property is sold?
It depends on the province and the mortgage. In Ontario, a lender can generally sue the borrower on the covenant to pay, and any guarantor on the guarantee. In Alberta, the Law of Property Act limits recourse to the land on many mortgages given by individuals, with exceptions for corporate borrowers and high-ratio insured mortgages. Whether a claim is worth pursuing depends on the borrower's assets and income.
Can a lender get a credit report on a borrower in default?
Reports on individuals must be ordered for a purpose the law permits. In Ontario, the Consumer Reporting Act allows a report to be given to someone who intends to use it in connection with the extension of credit to, or the collection of a debt of, the person it is about (s. 8). Other provinces have their own consumer reporting and privacy laws. Ask counsel what applies to your file.
This article is general information, not legal, accounting or financial advice. Figures and provisions are from the sources linked or named above as published on the dates shown, and provincial law changes. Quality Credit Reporting prepares investigative credit reports for businesses; it is not a collection agency. Speak with a lawyer about your file.
Related reading: choosing the right recovery report for each stage of a file and optimizing mortgage enforcement with a credit report.
Tags: Recovery / Legal
