Ontario credit unions experienced astounding asset growth during the first quarter of 2025. Much of this growth was driven primarily by a boom in mortgage and commercial loan demand. According to the Financial Services Regulatory Authority of Ontario (FSRA), total sector assets rose by a high $3.26 billion. This leap is a 3.26 percent increase from last year’s numbers during this same time span. This dramatic growth illustrates an impressive and exciting pivot toward direct lending even as market conditions have continued to go up and down.
The whole financial scene has shifted profoundly for credit unions. This rapid change is driven by numerous factors including changing consumer behaviors and larger economic forces. Then on October 9, the FSRA issued their third quarter report claiming some remarkable numbers. Commercial loans added $1.94 billion to assets growth—that’s 7.68 percent annualized for first quarter of 2025.
Factors Behind the Growth
Businesses of all sizes are looking for money to fill gaps in new investments and terms for working capital. By creating more investment opportunities, this trend has increased the demand for commercial lending. Cristián Bravo is professor and Canada Research Chair in Banking and Insurance Analytics at the University of Western Ontario. He looked at what’s fueling this growth. For one, he noted that businesses were sharply reducing their short-term borrowing in the lead-up to 2025. They were interested in knowing the impact of U.S. tariffs on their profits.
“Tariffs are impacting some very specific areas. Most of our exports are not affected by tariffs, but the ones that are, are seriously affected,” – Cristián Bravo.
While credit unions have enjoyed strong asset growth, the financial picture paints a different story. Year-over-year cash and investments fell off by $292.23 million or 2.57 percent. This drop overall signals that the demand for loans is high but managing liquidity continues to be a key challenge for these organizations.
Trends in Housing Market
Overall, the real estate market in Ontario is seeing divergent trends. This means in 2025, home sales would reach record lows even as homebuilding completion rates reach all-time highs. Bravo said that the condo market in Toronto is “suffering very much right now.” His other main point was that high prices for small downtown condos are not telling the full demand story.
“I don’t see exactly what’s going on in a clear manner,” – Cristián Bravo.
Bravo noted, housing prices are already starting to fall. This encourages some would-be purchasers who have long been on the sidelines to rejoin the market. He noted that prices are a key mode of supply — lower prices will drive more demand once households discover monthly payments are more affordable.
“As housing prices come down, some of these people who have been waiting for a while are jumping into the market,” – Cristián Bravo.
The FSRA expressed support for this direction. They noted that with borrowing costs and home prices recently receding over the last year, homeownership has become more within reach for many households.
Commercial Lending Trends
On the national scene, Ontario’s credit unions have experienced some remarkable trends. For banks in Canada, a similar trend is evident, with the big 5 banks reporting strong commercial lending growth. This alignment is symbolic of a broader recovery throughout the financial sector. Institutions aren’t simply sitting back in the face of this economic perfect storm.
The data from the Toronto Regional Real Estate Board provided critical insights into these developments, illuminating how market forces are influencing both lending practices and consumer behavior across various segments of the economy.
