The Debt Picture in 2025: Canadians Are Carrying More Than Ever
If you’ve felt like debt is creeping higher every month, you’re not imagining it. The numbers confirm it:
- Total consumer credit balances in Canada hit $2.52 trillion in Q2 2025, up about 4.4% compared to a year earlier. (TransUnion Canada)
- The average non-mortgage debt per consumer, things like credit cards, lines of credit, auto loans, installment loans, now sits at $26,845. That’s a 2.8% bump from Q2 2024. (GlobeNewswire / TransUnion)
- Despite the climb, analysts note that non-mortgage debt has actually fallen by about 10% in real terms since 2022. Why? Because housing debt is eating up more of the pie, mortgage balances are growing faster than everything else.
And here’s where it gets worrying:
- Over 1.4 million Canadians missed at least one credit payment in Q1 2025. (Equifax Canada)
- Serious delinquencies (90+ days past due) rose to 1.77% nationally in Q2 2025, up from last year. (Wealth Professional)
- In some regions, it’s worse: Alberta’s delinquency rate hit 2.29%, the highest in the country. (TransUnion Canada)
So yes, debt is rising. But what’s equally clear is that Canadians are starting to fall behind. And once you’re 90+ days overdue on a credit card or loan, the hole gets harder to climb out of.
Why Non-Mortgage Debt Keeps Growing
There’s no single reason, but a handful of economic realities are driving this trend:
- High cost of living. Groceries, gas, and utilities are up, and many Canadians are leaning on credit cards and installment loans to cover gaps.
- Higher interest rates. Even if you’re not missing payments, carrying balances is more expensive than it was three years ago.
- Younger borrowers struggling. Equifax data shows missed payments are most concentrated among Canadians under 35, the same group dealing with expensive rents, stalled wages, and student debt.
- Shift in borrowing habits. Installment loans and “buy now, pay later” services are growing. These are easy to access but add another layer of monthly commitments.
The result? Non-mortgage debt is climbing, and households are stretched thinner than they’ve been since the last financial crisis.
Why Delinquencies Are a Big Red Flag
Let’s get blunt. A missed payment or two doesn’t sound like the end of the world. But here’s what happens when debt tips over into delinquency:
- Credit score damage. Even one missed payment can drag your score down. At 90+ days overdue, lenders flag your account as high-risk.
- Compounding interest. With average credit card rates still sitting around 20% or higher, balances snowball quickly.
- Collections risk. Go too long without paying, and accounts get sent to collections. That’s not just stressful, it limits your ability to refinance or borrow in the future.
- Fewer options. The longer the delinquency, the fewer doors remain open. Waiting too long to act can mean bankruptcy or consumer proposal become your only options.
That’s why it’s critical to act early, before debt gets to the “90+ days past due” stage.
The Homeowner Advantage: Using Equity to Kill Debt
Here’s the good news: if you own a home, you have tools most Canadians don’t. Equity can be a weapon against high-interest debt, if you use it wisely.
1. Debt Consolidation Mortgage
- Roll credit card and personal loan balances into your mortgage.
- Mortgage rates are far lower than 20% credit cards, even with today’s higher interest rate environment.
- This can save hundreds of dollars each month in interest.
- Key: you need discipline. Don’t re-rack the credit cards once they’re cleared.
2. Home Equity Line of Credit (HELOC)
- Flexible borrowing against the value of your home.
- Interest rates are higher than a mortgage but far lower than unsecured credit.
- Best for homeowners who need to consolidate or manage variable cash flow.
- Risk: HELOCs are callable, and rates are variable. Treat it carefully.
3. Reverse Mortgage (For Homeowners 55+)
- Tap into your home’s equity without selling or making monthly payments.
- Today’s reverse mortgage balances in Canada sit around $7.8B (OSFI, June 2025).
- Yes, rates are higher than traditional mortgages, but for seniors struggling with cash flow, it can be a lifeline.
Why You Need Regulated, Professional Advice
Debt consolidation isn’t one-size-fits-all. In Ontario, every mortgage solution is governed by the Mortgage Brokerages, Lenders and Administrators Act, 2006 and standards like Ontario Regulation 188/08 (disclosure and cost of borrowing).
Translation: a licensed mortgage brokerage must disclose the risks, costs, and alternatives before you sign anything.
That’s where working with a team like Mortgage Brain matters. Our team has a diverse background in consumer regulatory finance, we know both the strategies and the pitfalls.
Our job is to help you explore equity-based strategies to reduce high-interest debt responsibly, always under the guidance of licensed mortgage professionals.
Bottom Line
Non-mortgage debt in Canada is climbing, and the cracks are starting to show. With $26,845 in average non-mortgage debt per consumer and more than 1.4 million Canadians missing payments, the message is clear: unsecured borrowing is getting harder to manage.
But if you own a home, you don’t have to drown in 20% credit card interest. Equity can be the tool that gets you back in control, if you use it wisely, and with the right licensed guidance.
At Mortgage Brain, we help Canadian homeowners turn equity into financial freedom.
If debt is eating away at your income, contact us today and let’s build a plan that works for you, with the right licensed guidance every step of the way.
