Credit unions in Ontario saw a growth in assets in the first quarter of 2025 largely due to a spike in demand for mortgages and commercial loans, according to the province’s financial regulator.
In a new report published on Oct. 9, officials with the Financial Services Regulatory Authority of Ontario (FSRA) noted a $3.26 billion (3.26 per cent) increase in total sector assets in the first three months of 2025 compared to the same period the previous year.
Despite an unstable housing market which has seen property values drop in the Greater Toronto Area amid sluggish sales, the FSRA says residential mortgage loans within the credit union sector grew by $1.11 billion (2.06 per cent) year-over-year.
“On average, both borrowing costs and home prices have declined over the past year, making monthly payments more manageable for households looking to buy a home,” the FSRA noted, citing data from the Toronto Regional Real Estate Board.
Recent interest rate cuts from the Bank of Canada have also encouraged some Ontarians to jump into the housing market, despite a downturn, economists say.
“As housing prices come down, some of these people who have been waiting for a while are jumping into the market,” Cristián Bravo, a professor and Canada Research Chair in Banking and Insurance Analytics at the University of Western Ontario, told CityNews. “But not necessarily in the small condos in downtown Toronto that are being sold at an insanely high price.”
According to a Sept. 2025 report from the real estate consultancy firm, Altus Group, home sales in the province reached record lows this year, despite completion rates hitting record highs. It has spurred the province to see its highest housing inventory level to date.
“The condo market in Toronto is suffering significantly,” Bravo added. “But some people who have been pushed to the side are coming back into the market […] if prices go down, demand goes up.”
Pent-up demand for commercial loans
Commercial loans also boosted credit unions’ assets by $1.94 billion (7.68 per cent) in the first quarter of 2025, while cash and investments decreased by $292.23 million (-2.57 per cent) compared to the same period the previous year, according to the latest FSRA report.
Bravo says commercial loans are typically requested for businesses to spend on new investments or working capital to cover daily operating expenses, but he can’t pinpoint why credit unions are seeing growth in this area.
“I don’t see exactly what’s going on in a clear manner,” he explained. “I do have a theory […] in 2024 we saw a decrease in lending because businesses stopped investing while they waited to see the bottom line impact of U.S. tariffs.”
“Since then, we’ve seen several banks reporting growth in their commercial loans and that probably has to do with investments,” Bravo added. “As we get more clarity on the situation, companies are starting to invest again. And it seems to be across the board.”
While the credit union sector is relatively small in the overall financial system and commercial lending is not as significant as it is with large banks, Bravo says he is seeing similar trends in other areas.
In recent months, three of Canada’s largest banks reported increases in commercial lending, mirroring the trends seen in the credit union sector.
“Tariffs are impacting some very specific areas. Most of our exports are not affected by tariffs, but the ones that are, are seriously affected,” Bravo explained. “I expect that commercial lending will suffer in those places.”
