The Ontario real estate market is looking at the possibility of a rebound after a decline in home sales in 2024. Elevating borrowing costs and a fluctuating market saw a rise in the power of sale rates. There are implications on how the Ontario real estate market will affect the power of sale rates in 2025. It’s also essential for homeowners to know how to avoid a power of sale.
The ebb and flow of Ontario’s real estate market influences property values. When a power of sale is triggered after a borrower defaults on a mortgage, the house can be sold at the end of the process. The proceeds can be used to pay off lender debts, but they need to follow a strict process.
When a borrower violates the terms of a mortgage agreement, a power of sale process starts. Usually, the borrower failed to make one or several mortgage payments or breached a covenant in the contract itself.
Breaching a covenant in the mortgage can include failing to insure the property or using it for illegal activities. Damaging the property on purpose by not paying the taxes and failing to provide the home or property are also breaches.
A power of sale involves several stages involving notices. Fifteen days after a default, the lender can deliver a Notice of Sale Under Mortgage. After that, the lender needs to wait 35 days or 40 days if married people occupy the home before they move on.
There’s a waiting period after the Notice of Sale called the Redemption Period. During this period, the borrower must pay off the entire mortgage or bring it into good standing, including the legal fees the lender has to incur.
If that doesn’t happen, the lender will file a Statement of Claim. Then, the lender can sign the default judgment after they file a court motion to allow for a Writ of Possession.
At that point, the sheriff in the location can schedule a date for the eviction of the people who lived in the house, and the property will be sold.
Several recent trends have recently pointed to possible changes in the power of sale rates.
The Canadian Real Estate Association (CREA) has reported that in the fourth quarter of 2024, there were specific indications that housing sales would rebound in 2025. For example, the fourth quarter of 2024 reports that sales were up 10% from the third quarter of that year.
However, overall, 2024 was a year with fluctuating prices and sales. These were representative of the market’s sensitivity to interest rate changes in economic conditions.
There have been reports of declining home sales and affordability challenges because of the skyrocketing home prices and wage growth that’s not keeping pace. Reuters has reported that Toronto home sales dropped a staggering 18.7% in December 2024. That represented a five-month low.
Regarding elevated borrowing, The Canadian Mortgage and Housing Corporation (CMHC) reports that interest rates rose until March 2022. Although there’s been a recent reversal in those rates, estimates still say that up to 2.2 million mortgages could face an interest rate shock in 2025.
These two factors impact homeowners in Ontario. Working together, they can increase the risk of a mortgage default and power of sale. For example, homeowners with variable-rate mortgages or those renewing their mortgages can face big jumps in their costs.
Elevated borrowing costs impact the market by suppressing the demand for housing and lowering property values. However, they also have some impacts on homeowners who already have homes.
Avoiding the consequences of elevated borrowing costs means being financially prudent.
Keeping your finances healthy to avoid a power of sale means doing several things. Some of the strategies are proactive. Other work will be done after the power of sale process has started.
Another good option is to consider a second mortgage from a private lender. You can use the money to stop a foreclosure or a power of sale.
Going forward, a homeowner’s ability to pay their mortgages affects the power of sales rates. There’s evidence that there will be more housing activity in 2025 than there was in 2024. For example, the Canadian Real Estate Association (CREA) forecasts a 6% rise in sales in 2025. A robust market will drive the rates down or leave them at current levels.
Jonathan Alphonso is a real estate professional who understands the implications of a power of sale. He offers private mortgage loans that provide the money to stop that process or a foreclosure. Major media outlets, like Global News and the Toronto Star, have sought the team’s input. If you or a loved one are facing difficulties with a mortgage, you may want to consider getting a free consultation from him.
Jonathan maintains information sites, including mortgagebrokerstore.com and powerofsalesontario.ca. You can reach him at 416-499-2122 or by email at ron@powerofsalesontario.ca.
jonathan March 14th, 2025
