TORONTO – A comprehensive overview of household finances reveals that while many Canadians are managing through financial challenges such as tariffs, inflation, and a soft job market, there remain significant credit issues for specific groups. One prominent example is Goeasy Ltd., a subprime lender that recently reported substantial losses amounting to hundreds of millions, driven by a $178 million loan write-down, which led to a sharp decline in its stock value.
Despite a report from credit rating agency TransUnion indicating that overall delinquencies remained unchanged in the last quarter of 2025 compared to the previous year, a closer examination shows that financial difficulties are intensifying for those already in precarious situations. Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, highlights a “K-shaped recovery,” where average figures may seem satisfactory, yet they conceal stark divergences in financial conditions across households.
The youth unemployment rate and the accumulated costs of living have intensified financial pressures on various groups. Bruce Sellery, chief executive of Credit Canada, notes that while many individuals are stable, there exists a growing divide, with some facing significant challenges. Requests for assistance to the non-profit credit counseling service surged by 31% last year, reflecting a broader trend in which more people seek help due to rising living costs rather than acute financial crises like job loss or health issues.
Data from the Canadian Association of Insolvency and Restructuring Professionals shows that consumer insolvencies reached 140,457 in 2025, marking the highest levels since 2009, averaging around 385 daily. In addition, delinquencies on non-mortgage debts, including credit cards and auto loans, have hit the highest levels in over a decade. Bank of Canada statistics reveal that 2.64% of instalment loans were at least 90 days in arrears by the end of 2025, indicating a double increase from four years earlier.
Goeasy’s updated financial figures further underscore this issue. The firm anticipated that around 8.75% of its loans would default last year, but the figure instead rose to 12.9%, with a notable 24% increase in the fourth quarter. The expectations for defaults are anticipated to rise to 18% in the first quarter of the current year, highlighting a troubling trend as more individuals resort to personal loans to cope with the escalating cost of living.
This rise in defaults has prompted lenders to tighten credit standards. TransUnion observed a decline in the issuance of credit cards, auto loans, and instalment loans, while approvals are increasingly skewed towards higher-quality borrowers. Equifax also noted similar tightening from lenders. Oakes emphasized that while consumer demand for credit persists, lenders are adopting stricter lending criteria.
In response to investor concerns, Goeasy’s CEO, Patrick Ens, announced measures to enhance risk management, including tightening credit standards and improving collections resources. The financial strain is not limited to subprime borrowers; even those with better credit ratings are experiencing increased financial pressure. Regional disparities further complicate the situation, particularly in provinces like Ontario and British Columbia, where rising mortgage renewal rates exacerbate financial stress for households.
As Randall Bartlett, deputy chief economist at Desjardins, pointed out, regions facing more significant affordability challenges, such as high-interest rates, are witnessing a more pronounced divide in financial health. Households in these markets are increasingly strained, leading to declining savings and a greater reliance on credit to meet essential expenses.
While the Bank of Canada's interest rate cuts have generally contributed to reduced debt-to-income ratios, such measures offer little respite for subprime borrowers reliant on high-interest products. Oakes noted a concerning trend where missed payment rates for non-homeowners are rising much faster compared to those who own homes, further widening the financial gap.
In summary, the intricate landscape of Canadian household finances reveals an alarming divide in financial health, with some individuals thriving while others face considerable challenges in managing rising living costs and accruing debts. The ongoing strain underscores the need for targeted support and financial education to bridge the widening gap in economic stability across the country.
