CMHC's fall Residential Mortgage Industry Report, released October 27, opens with reassurance: Canada is not facing a broad mortgage crisis.[1][2] The rest of the report is less comfortable for southwestern Ontario. When CMHC ranks Canada's big cities by how much their mortgage delinquency rate rose over the past year, Toronto is first. London and Windsor are second and third.

For homeowners, that is a regional economic story. For people who hold units in mortgage investment corporations and other private mortgage funds, it is closer to home, because the same report says the lenders showing the most stress are the mortgage investment entities (MIEs) those funds are built on.

The southwestern Ontario line

CMHC uses Equifax data to compare the share of mortgages 90 or more days past due in the second quarter of 2025 and 2026.[1] London went from 0.18% to 0.27%. Windsor went from 0.17% to 0.26%. Both are increases of roughly 50% in a year, faster in relative terms than Toronto's move from 0.24% to 0.33%. Kitchener-Cambridge-Waterloo (0.18% to 0.24%) and Hamilton (0.19% to 0.25%) also posted some of the larger increases. Ottawa-Gatineau barely moved, at 0.16% to 0.17%, and Montréal was flat.

The absolute levels are still small. Roughly one mortgage in 370 in London is seriously behind. But the direction is consistent, and CMHC expects Ontario arrears to keep rising through mid-2027, with the largest and longest increase of any province.[2] On the Canadian Bankers Association measure CMHC also cites, Ontario's rate reached 0.32% in Q2 2026, against 0.09% in 2019 and approaching the levels of 2008.[1]

CMHC links the regional pattern to trade tensions hitting manufacturing, including autos, plus a softer resale market that leaves stretched borrowers fewer ways out. It also notes that the share of mortgage holders at high risk of bankruptcy has kept edging up in Toronto, Windsor, London and Kitchener-Cambridge-Waterloo.[1] That fits the local labour data. Statistics Canada's September Labour Force Survey showed London's unemployment rate at 8.4%, up 2.1 points from a year earlier, while Windsor's had fallen to 7.3% from above 10% a year earlier.[3]

The lender that shows stress first

The report's most pointed finding is about who holds the riskiest loans. At chartered banks, 90-day delinquency was 0.28% in Q2 2026. At credit unions it was 0.14%. At MIEs it was 2.57%, up from 1.83% a year earlier and roughly nine times the bank rate.[1]

That gap is partly by design. MIEs lend to self-employed and credit-impaired borrowers, and to people who need short-term or bridge money while they sell, refinance or finish a project. Those borrowers feel a weaker economy sooner. CMHC stresses that MIEs held only 1.8% of outstanding mortgage balances in Q1 2026, so their problems are not a threat to the system.[1] That is true at the system level. It is not much comfort if a large part of your fixed-income allocation sits in that 1.8%.

Why arrears are lasting longer

CMHC's survey of non-bank lenders splits MIE results into only two regions, the Greater Toronto and Hamilton Area and the rest of Canada. In the GTHA, the dollar-weighted share of MIE balances 90 days past due rose from about 3.0% in Q3 2023 to 11.1% in Q1 2026. In the rest of Canada, which includes London and Windsor, it rose from 1.9% to 3.8%, with the biggest jump in the latest quarter.[1]

CMHC reads the GTHA climb as loans staying delinquent longer, not just more loans going bad. It points to three causes: interest-only structures (69.7% of GTHA MIE balances), thinner equity (uninsured balances above 80% loan-to-value went from 1.6% to 9.2% in two years) and heavy debt loads (29.0% of balances held by borrowers spending over 60% of income on debt).[1]

The rest-of-Canada figures are milder but not static. Interest-only loans were 57.3% of MIE balances. The share of balances with debt service above 60% rose from 11.9% to 14.9%, and high-LTV uninsured balances went from 2.1% to 2.6%.[1]

What the data can't tell you

The report has blind spots that matter for southwestern Ontario specifically. The MIE survey cannot isolate the region, so London and Windsor private loans are blended with Calgary, Halifax and everywhere else outside the GTHA. The city rankings cover all lenders, not MIEs, and come from Equifax, while the provincial series comes from the bankers' association, so the two are not directly comparable. Nor does the report separate owner-occupied homes from investor-owned rentals or small multi-unit buildings, which is where much private lending in mid-sized Ontario cities actually sits.

What it does provide is a direction and a mechanism. Stress is showing up first in non-mortgage debt. Delinquencies on auto loans, credit cards and lines of credit are all climbing, and CMHC found the rates on lines of credit and credit cards rising proportionally faster among mortgage holders than among people without a mortgage.[1] It then appears at the lenders with the weakest borrowers, and lingers where borrowers have little equity and little income left over.

Reading it as an investor

A mortgage fund's headline yield says little about how it will behave in this phase. The questions that matter follow from CMHC's own mechanism. How much of the book is interest-only, and how much of it relies on a sale or a refinance to repay? How much is concentrated in the regions CMHC flags, including London, Windsor and Kitchener-Waterloo, not just the 905? How has the fund marked loans that are past due, and how long have they been there? And what share of borrowers would have trouble refinancing if values in their market are flat or lower at maturity?

Investors should also ask how redemptions are handled if arrears rise. Funds that pay distributions from interest that is accrued but not collected can look stable longer than the loans underneath them.

None of this means private mortgage lending in southwestern Ontario is broken. Arrears are rising from low levels, CMHC thinks the largest renewal shock has passed, and new lending looks less risky than the older loans now souring.[1] But the report is clear that stress is regional and that the non-bank end of the market will see it first. Southwestern Ontario is now one of those regions.

The Bank of Canada's rate decision later today will add another input.[4] For borrowers already behind, though, the issue is less the next 25 basis points than whether their local job market and home values give them a way to catch up.

This article is for information only and is not investment, legal or financial advice.

Sources

[1] Residential Mortgage Industry Report, Fall 2026 Edition, CMHC (Oct. 27, 2026), figures 1 to 8 and Table 1: https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report

[2] Ontario mortgage arrears expected to rise through mid-2027: CMHC, news release (Oct. 27, 2026): https://www.cmhc-schl.gc.ca/media-newsroom/news-releases/2026/ontario-mortgage-arrears-expected-rise-through-mid-2027-cmhc

[3] Labour Force Survey, September 2026, Table 7: Labour force characteristics by census metropolitan area, Statistics Canada (Oct. 9, 2026): https://www150.statcan.gc.ca/n1/daily-quotidien/261009/t007a-eng.htm

[4] Interest rate announcement and Monetary Policy Report, Bank of Canada (Oct. 28, 2026): https://www.bankofcanada.ca/2026/10/interest-rate-announcement-and-monetary-policy-report-october-28-2026/