The Office of the Superintendent of Financial Institutions has identified real estate-secured lending as the top risk facing the country’s financial system in its 2026–2027 Annual Risk Outlook.

The report outlines three key areas of concern: Real estate secured lending (RESL), non-bank financial institution (NBFI) risk, and liquidity and funding risk. While RESL and NBFI risks were also highlighted last year, OSFI notes that conditions have shifted, with housing and mortgage pressures intensifying in parts of the country and risks outside the traditional banking system expanding as non-bank lenders and investment funds take on more borrowing.

The outlook also flags growing global uncertainty as a potential threat to confidence in funding markets. Although funding costs and availability have remained stable, OSFI warns that the speed at which a liquidity event could unfold remains a significant concern. In response, the regulator continues to adjust capital requirements, noting that risk weights may increase or decrease over time as part of ongoing efforts to maintain balance between risks and capital levels.

“Canadians can be confident that OSFI acts early, transparently, and decisively to strengthen financial-system resilience in an uncertain economic and geopolitical environment,” said Peter Routledge, Canada’s superintendent of financial institutions.

The findings come as Canada’s condominium-development sector is grappling with many distressed assets and stalled projects due to slow and cancelled presales; higher borrowing costs, rapidly changing market and macroeconomic conditions, along with increasing Canada-U.S. trade tensions and uncertainty tied to geopolitical issues and residents concerned about their job and financial security.

OSFI’s Annual Risk Outlook is published each spring, with updates issued in the fall if risks evolve significantly. OSFI is also developing a comprehensive Credit Risk Management guideline, with feedback on its initial consultation document due by July 29.

In addition, revisions to liquidity adequacy requirements targeting specific retail-deposit categories will take effect May 1, with further updates and industry consultations expected later in May.