Report says falling interest rates and larger mortgages are driving consumer debt this record
Canadians are taking on more credit even as signs of financial strain deepen, with total consumer debt climbing to a new high in the third quarter of 2025.
According to TransUnion Canada’s Q3 2025 Credit Industry Insights Report, total consumer debt rose to $2.6tn, driven largely by higher mortgage balances amid falling interest rates.
TransUnion said balances grew across all major products and across all risk tiers, with the number of credit-active consumers up 2.7 percent year-over-year while overall balances increased at a faster 4.1 percent pace.
CTV News reported that mortgage balances alone rose 4.1 percent year-over-year to $1.89tn in Q3 2025, underscoring how housing debt continues to dominate Canadian household leverage.
The agency said mortgage originations (the process of drafting a loan) were up 18 percent year-over-year as homeowners refinanced or renewed earlier to lock in lower interest rates.
According to TransUnion, many borrowers shifted away from the traditionally popular five-year fixed term and opted for shorter one- or three-year fixed terms, a trend that has increased mortgage “churn” and driven a spike in origination volumes.
Matt Fabian, director of financial services research and consulting at TransUnion Canada, said that in today’s elevated interest rate environment, consumers are “potentially tempted to opt for shorter-term mortgages to optimize for renewal at favorably lower rates.”
CTV News reported that the average new mortgage loan amount, primarily from homeowners in Toronto and Vancouver, increased 4.1 percent year-over-year to $359,623, even with some easing in home prices.
Non-mortgage borrowing is also climbing.
Total non-mortgage debt increased 4.3 percent year-over-year to $673bn.
TransUnion said the average non-mortgage balance per consumer reached $27,100, up 2.6 percent year-over-year, describing it as a return to a more moderate pace of growth similar to the pre-pandemic period.
Within revolving credit, CTV News reported that the average credit card balance per customer rose 1.9 percent year-over-year to $4,652, but new credit card originations declined 8.6 percent as lenders maintained a cautious stance.
While fewer new cards were issued, new card limits climbed 4.8 percent to over $6,500.
The average monthly credit card spend per consumer fell 3.4 percent year-over-year to $1,373, which the agency said may point to declining consumer optimism about the economy amid rising unemployment and continued trade tension.
Other credit products moved higher: average auto loans rose to $30,396 in 2025 from $29,138 in 2024, installment loans increased to $23,398 from $22,534, and lines of credit climbed to $36,208 in 2025 from $34,854 in 2024.
Overall revolving balances – the portion of debt carried from month to month and subject to interest charges – remained flat from the previous year.
Delinquency trends are signalling growing divergence in household resilience.
CTV News reported that early-stage delinquency rates of 30 or more days past due declined to 4.38 percent, suggesting fewer consumers are missing initial payments.
However, late-stage delinquency rates of 90 days past due continued to rise to 1.77 percent.
TransUnion said delinquency patterns reveal widening financial disparity, noting in its Q3 report that late-stage delinquency increases were sharpest in Ontario, Alberta and Quebec.
Fabian said rising unemployment and tariff-related pressures continue to pose challenges, but added that early signs of stabilization in core economic indicators, particularly interest rates and inflation, are beginning to offer some relief to consumers.
