2.2M mortgage holders will face ‘interest rate shock’ in next 2 years: CMHC

While overall mortgage delinquencies are holding steady, there's been an uptick of mortgages in arrears among the highest value loans, the CMHC reports.

Canada’s housing agency is warning of a looming “shock” for borrowers renewing their mortgages as a new analysis shows the pain of higher interest rates is starting to put pressure on some homeowners.

Canada Mortgage and Housing Corp. (CMHC) released its biannual report on the country’s residential mortgage market on Thursday.

The analysis shows that more than 290,000 Canadians renewed their mortgages with a chartered bank in the first half of 2023, facing “significantly higher” interest rates and putting “financial pressure” on these borrowers.

Despite the higher debt-servicing costs, CMHC noted that the mortgage delinquency rate in Canada is holding steady at the “historically low” rate of 0.15 per cent.

But a deeper dive into those delinquency rates reveals signs of “financial strain” among homeowners, CMHC said.

The proportion of mortgages in arrears — those behind on payments — for loans valued at $400,000 or more has been on the rise since the third quarter of 2022, the agency said.

The trend is particularly visible among mortgages worth $850,000 or more, CMHC said, with delinquency rates rising three basis points to 0.13 per cent since that time.

Mortgages worth $400,000 or less are still showing delinquency rates above the higher value loans, though these metrics have held steady.