OTTAWA – Canada’s housing agency says risks remain in the mortgage market as over a million contracts are up for renewal next year while a growing share of new mortgages are being issued by alternative lenders.
Canada Mortgage and Housing Corp. says in its latest residential mortgage industry report that 1.2 million mortgages are up for renewal in 2025 and that 85 per cent of those were signed when the Bank of Canada rate was at one per cent or lower.
Borrowers up for renewal next year will face lower interest rates than many saw this year though, as the Bank of Canada has lowered its key rate four times already to what is now 3.75 per cent, with more cuts expected ahead.
The higher interest rates upon renewal this year have helped push up the delinquency rate to 0.19 per cent in the second quarter, from a record low of 0.14 per cent in 2022, but CMHC says it remains well below the 0.28 per cent pre-pandemic rate.
While delinquency rates remain low for banks and credit unions, they have been on the rise at mortgage investment corporations to surpass pre-pandemic levels after hitting 1.15 per cent in the first quarter.
The rise came as alternative lenders also saw faster growth in mortgage debt than the overall market in the second quarter.
This report by The Canadian Press was first published Nov. 4, 2024.
