Insights from CMHC’s Fall 2024 Residential Mortgage Industry Report

High borrowing costs and changing preferences

High borrowing costs and the anticipation of lower mortgage interest rates are key drivers influencing borrower behavior. More borrowers are choosing shorter mortgage terms, particularly fixed-rate mortgages ranging from three to less than five years. In July 2024, these accounted for more than half of all newly extended mortgages by chartered banks.

Debt growth and economic factors

Residential mortgage debt saw a 3.5% increase year-over-year in July 2024, reaching $2.2 trillion. Growth has been slower due to high borrowing costs and subdued home buying activity. However, softer inflation and a subsequent decrease in the Bank of Canada's policy interest rate are expected to boost mortgage lending activity and growth.

Market stability and regulatory changes

The Big 6 banks maintain a dominant market share, holding nearly three-quarters of outstanding mortgages in Canada. Recent regulatory changes, including the removal of the stress test on mortgage switches and higher caps on insurable properties, may result in market share changes in 2025.

Risks and vulnerabilities in housing finance

The mortgage delinquency rate continues to rise, with expectations for further increases in 2025. However, rates are still below pre-pandemic levels and below averages since 1990. Credit card and auto loan delinquency rates, often leading indicators of mortgage delinquency, have also risen, suggesting potential challenges ahead.

Household debt remains a vulnerability for the Canadian economy. Mortgage debt has grown faster than inflation. A large number of mortgages are up for renewal in 2025 and 2026, with many borrowers facing higher interest rates than when their terms began, potentially exacerbating financial pressures.

Alternative lenders experienced increased lending in early 2024, regaining momentum from the previous year. However, their risk profile has heightened compared to 2023, indicating potential challenges in maintaining market share while managing increased risk.

Explore more data using the Residential Mortgage Industry Data Dashboard.

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