Big banks' mortgages prove nearly risk-free amid market softening.
Source: theglobeandmail.com
TL;DR
- Big Six Write-Offs: Canada's major banks wrote off just $38-million in mortgages from November 2025 to January 2026 on a $1.76-trillion portfolio.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)[[2]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets)
- Four-Quarter Total: Over the past four quarters, total mortgage write-offs reached $168-million, or 0.01 per cent of holdings, per WOWA Data Labs.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
- Risk Mitigation: Low losses stem from stress tests, insurance rules, disciplined underwriting, and borrower equity cushions despite softening real estate markets.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
The story at a glance
Canada's Big Six banks have seen minimal mortgage losses amid softening real estate markets in Ontario and British Columbia, according to data aggregated by WOWA Data Labs. The article by Hanif Bayat, CEO of WOWA.ca, explains how regulatory safeguards and careful lending practices keep risks low. This counters fears of painful defaults raised for years. Nationally, mortgage arrears over three months stood at 0.24 per cent as of December 2025.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Key points
- Big Six banks' combined mortgage portfolio totalled $1.76-trillion as of late January 2026.
- Mortgage arrears rate for Big Six banks: 0.24 per cent (over three months, December 2025); mortgage investment corporations: 2.01 per cent.
- Mortgage stress test requires qualification at rates above the contracted rate, deterring defaults.
- Loans with down payments under 20 per cent carry insurance from providers like Canada Mortgage and Housing Corp., shifting risk from banks.
- For uninsured mortgages, home equity typically covers losses; lenders can pursue borrowers' other assets if needed.
- Big Six banks avoid riskier market segments through strict underwriting.
Details and context
Concerns about real estate softening in Ontario and British Columbia had raised fears of major bank losses. Yet data shows defaults remain rare thanks to Canada's regulatory framework, including the stress test buffer that lets borrowers afford payments even if rates rise.
Risk distribution plays a key role: the Big Six stick to prime borrowers, sidestepping higher-risk areas that plague alternative lenders like mortgage investment corporations.
Losses stay contained through insurance on high loan-to-value mortgages and equity protection on others. Banks hold a multitrillion-dollar book with near-zero write-offs, making residential lending reliably profitable.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Key quotes
"When analysts speak of mortgage risk in Canada, they are largely describing a segment of the market that the Big Six have deliberately avoided." – Hanif Bayat, article author and WOWA.ca CEO.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Why it matters
Softening housing markets test the stability of Canada's financial system, where banks hold vast mortgage portfolios. For investors and depositors, the near-zero write-offs signal resilience and steady profits from what has become a low-risk asset class. Watch arrears rates and renewals in high-cost regions like Toronto and Vancouver, though regulatory buffers suggest limited near-term threats.
What changed
No prior state described.
FAQ
Q: Why have Big Six banks seen such low mortgage write-offs lately?
A: Write-offs totalled $38-million from a $1.76-trillion portfolio between November 2025 and January 2026 due to mortgage stress tests, insurance on high-ratio loans, and borrower equity cushions. The banks also avoid riskier segments through disciplined underwriting. Over four quarters, losses hit just $168-million, or 0.01 per cent of holdings.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Q: How do Big Six arrears rates compare to other lenders?
A: Big Six banks reported 0.24 per cent of mortgages over three months in arrears as of December 2025. Mortgage investment corporations had a much higher rate of 2.01 per cent. This gap reflects the banks' focus on safer borrowers.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Q: What role does mortgage insurance play in limiting bank losses?
A: Loans with down payments under 20 per cent require insurance from providers like Canada Mortgage and Housing Corp., transferring default risk away from banks. For uninsured loans, home equity usually absorbs losses first. Lenders retain recourse to other borrower assets only in severe cases.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)
Q: Why are defaults rare despite real estate market softening?
A: The mortgage stress test forces qualification at higher-than-contracted rates, building a payment buffer. Borrowers also face personal liability beyond the home, discouraging defaults. Combined with equity protection, this keeps losses minimal.[[1]](https://www.theglobeandmail.com/investing/personal-finance/article-canada-big-banks-mortgage-writeoffs-real-estate-markets/)