The recent difficulties at Goeasy Ltd. Provide a touch of those problems after the subprime lender reported tons of of hundreds of thousands in losses last month after writing off $178 million in loans and sending its shares plunging. The problems got here whilst rankings agency TransUnion reported that overall defaults in the ultimate quarter of 2025 remained flat in comparison with a 12 months ago.
This is a component of a broader trend wherein many individuals, particularly homeowners, are doing well, while the financial burden is getting worse for individuals who were already struggling. “These high numbers can obscure a little bit what’s actually happening,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. “We’re talking about this K-shaped recovery, it’s kind of like this divergence. The average looks OK, but actually we have more extremes going in different directions.”
More and more Canadians are falling behind financially
Increased unemployment, particularly amongst youth, has created pressure, but many persons are falling behind just because of accrued living costs, said Bruce Sellery, chief executive of Credit Canada. “The paradox is that there are many people who are doing well and the world is fine, and many people who are in extremely difficult situations.”
The nonprofit credit counseling service has seen a 31% increase in inquiries over the past 12 months, including from many who haven’t necessarily faced a sudden financial challenge corresponding to job loss, health problems or divorce, but simply cannot deal with rising costs. “In the past, we have focused on people in acute need,” Sellery said. “What we’re seeing a lot more of now is just the peak of the rising cost of living.”
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The strain might be seen in consumer bankruptcies, which reached 140,457 in 2025, the very best since 2009, in line with the Canadian Association of Insolvency and Restructuring Professionals, a mean of about 385 per day.
This may also be seen in rising non-mortgage delinquencies, with bank cards, mortgage payments and automobile loans reaching their highest levels in greater than a decade. Data from the Bank of Canada shows that within the fourth quarter of 2025, 2.64% of installment loans were no less than 90 days delinquent, double the speed 4 years earlier. Delinquent bank card loans reached a 0.78% increase within the fourth quarter, up from 0.45% in 2021, while auto loans saw a 0.67% increase from 0.39% 4 years ago.
This may also be seen in Goeasy’s updated financial figures. The company had expected about 8.75% of loans to default last 12 months, a much higher figure than banks but reflecting riskier subprime borrowers. Instead, nonetheless, the 2025 figure jumped to 12.9%, including a 24% increase within the fourth quarter, with it expected to stay at 18% in the primary quarter of this 12 months.
According to TransUnion, payback rates are worsening as more people depend on personal loans to survive higher living costs.
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Credit scores have gotten tighter as defaults increase
But the increasing variety of borrowers who cannot repay their loans can be causing lenders to withdraw.
TransUnion saw a decline in recent originations of bank cards, auto loans and particularly installment loans, with approvals primarily benefiting higher quality consumers. Equifax has also seen a pullback from lenders, Oakes said. “That doesn’t mean there isn’t necessarily demand from consumers, it could simply be that lenders are tightening their monetary policy.”
Goeasy boss Patrick Ens promised investors a turnaround and said the corporate would just do that. “We have reduced new originations from lenders. We have significantly tightened lending standards,” Ens said in its quarterly analyst conference. “We will strengthen our corporate risk management through improved risk models, credit discipline and collection resources.”
Even non-subprime borrowers are feeling the pressure. The picture varies across the country, with rising bankruptcies in some places being felt by higher mortgage renewal rates, said Randall Bartlett, deputy chief economist at Desjardins. “The pressure is really being felt in the more unaffordable markets like Ontario and B.C., and households there are feeling the pressure of higher interest rates on their household budgets.”
Those feeling the pressure of upper rates of interest at renewal are contributing to the divergence of Canadian financial fortunes, he said. “You’ve got savings going down, loans going up to cover essentials, and so it’s really creating a very polarized story when it comes to the situation in Canada.”
The Bank of Canada’s rate cuts have helped lower the general debt-to-income ratio, but such rate moves don’t really help subprime borrowers who depend on bank cards or other particularly high-interest products. “People who don’t own a home or don’t have a mortgage are seeing delinquency rates rise much faster than those who do have a mortgage,” Oakes said. “So this gap is getting bigger and bigger.”
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