Ontario’s mortgage regulator is signalling that the private market is far from a secondary concern.
In its 2025-26 supervision plan, the Financial Services Regulatory Authority of Ontario (FSRA) warns that a spike in borrower vulnerability, weak condo pre-sales and growing tariff-related uncertainty could quickly reignite demand for private mortgages, even after a pullback over the past year.
To get ahead of that risk, the regulator says it will broaden its oversight of private brokering and mortgage administration, and expects brokerages to demonstrate stronger supervision, disclosure and documented exit strategies for clients.
“Now, more than ever, it’s critical that mortgage professionals put consumer protection at the forefront of everything they do,” FSRA writes. “We’re monitoring the situation closely and adjusting as needed.”
The warning comes as delinquency rates continued an upward trend throughout the year, led by a significant rise in Ontario. Toronto’s mortgage delinquency rate reached 0.24% in Q1, while the province-wide 90-day-plus arrears rate climbed to 0.27% in Q2, up 11 basis points year-over-year. Non-mortgage delinquencies are also rising, a concern given that they are often a leading indicator of future mortgage payment difficulties, FSRA notes.
Meanwhile, condo investors are facing mounting pressure, with FSRA citing CMHC estimates that some who closed on pre-construction units at peak prices in 2024 could face capital losses of about 6%. With pre-sales down roughly 75% in the GTA since 2022 and carrying costs outpacing rent growth, investor distress has become a growing concern.
Why FSRA is expanding supervision
FSRA says private lending remains a vital financing option for borrowers who no longer qualify at traditional lenders, but believes the current environment makes the sector more susceptible to consumer and investor harm.
Its 2024 “APR blitz,” focused on disclosure practices in private deals, found that just 35.5% of files reviewed had correct APR calculations.
Other issues that were flagged included:
- Required charges omitted: 28.6% of files excluded charges that should have been included in APR calculations, resulting in understated borrowing costs.
- APR too high on short-term mortgages: Of the 82 files with terms of six months or less, 42 (or 51%) had APRs above 35%. While those mortgages were contracted before the January 1, 2025 change to the federal criminal rate of interest, FSRA used the exam to remind brokers of the new threshold.
- Unlabeled estimates: 24.4% of files included estimated charges that were not clearly identified as estimates.
- Incorrect inclusion of costs: In 32.4% of files, charges that should have been excluded (such as borrowers’ legal fees) were included in APR calculations, leading to overstated APRs.
The regulator also stepped up reviews of mortgage administrators’ filings. Out of 266 licensed administrators, 12 were classified as high risk, and several were flagged for trust-account deficiencies, co-mingling of funds and advancing investor payments before receiving borrower payments.
Those with the most serious issues now face remediation requirements or enhanced examination.
What brokerages and administrators should expect
Looking ahead to 2025-26, FSRA says it will take a proactive approach to supervision, particularly in areas where consumer vulnerability and investor risk are most likely to intersect. Its priority areas include:
- continued examinations of private mortgage suitability, disclosure and exit strategies
- deeper reviews of conflict-of-interest situations, particularly where brokerages and administrators are related
- expanded oversight of large and now mid-sized brokerages with 100+ agents
- renewed scrutiny of principal brokers’ resourcing and compliance capabilities
The regulator notes that its consumer research found trust in the sector has improved since 2022, but so has the number of consumers who identify as vulnerable. That share has risen from 22% to 39%.
As FSRA writes, “now, more than ever, it’s critical that mortgage professionals put consumer protection at the forefront of everything they do.”
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Last modified: November 24, 2025
