CMHC research showed a split picture of strain and resilience
Canada’s long‑anticipated mortgage renewal wave moved from abstract risk to lived reality for millions of households, reshaping budgets and testing long‑standing assumptions about borrower resilience.
New research from Canada Mortgage and Housing Corporation (CMHC) suggests that, even as arrears rose, the story remains uneven across regions and borrower groups.
The national mortgage arrears rate—the share of borrowers 90 days or more behind—has been climbing from post‑pandemic lows, yet remained historically subdued.
CMHC pointed to what it called “two distinct financial realities”: one where emerging risks were most acute in pockets of the country, and another where arrears still sat below levels seen in past downturns.
Regional pressures concentrated in Toronto and Vancouver
According to CMHC analysis based on Equifax data, arrears are expected to keep rising moderately nationwide from late 2025 to late 2026, with pressures “vary[ing] across 9 major Canadian markets” and Toronto leading projected arrears growth.
In the Greater Toronto Area, the arrears rate has more than quadrupled from its low point, driven by high household debt, softer prices and sales, and a weaker labour market that has “limit[ed] households’ ability to manage rising mortgage payments.”
In Vancouver, high debt levels and “softening resale market liquidity” contributed to a moderate but steady rise in arrears, though at a slower pace than Toronto.
Other centres—such as Montréal, Calgary, Edmonton, Ottawa, Winnipeg and Halifax—showed more stable or modestly rising delinquency risk, shaped by local labour conditions and credit use rather than sharp housing corrections.
Mortgage arrears nationally edged back toward early‑pandemic highs while remaining below pre‑COVID levels, with Toronto and Vancouver flagged as particularly exposed as local markets cooled and non‑mortgage delinquencies rose. Those trends echoed earlier CMHC warnings that arrears in the two cities could approach decade‑high levels if sales stayed sluggish and listings remained elevated.
Pandemic‑era buyers under growing stress
Beyond geography, CMHC highlighted pandemic‑era first‑time buyers and other highly leveraged households as the group “most at risk.”
Borrowers who bought at peak prices with low rates between 2020 and 2022 are now rolling into renewals on “already high debt levels,” facing pronounced payment shocks and limited equity cushions.
CMHC estimated that more than 1.5 million households already renewed at higher rates, with another million due to reset over the coming year. That renewal wave “reduced many people’s ability to save, squeezed discretionary spending and influenced how they manage both new and existing credit.”
The agency also found that the number of high‑risk borrowers and the debt they carried has grown since 2021, even as low‑score borrowers began pulling back from new credit.
Refinancing at renewal is catching Canadian homeowners off guard as many discover the math no longer works in their favour.
— Canadian Mortgage Professional Magazine (@CMPmagazine) February 3, 2026
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Resilience owed to policy and borrower adjustments
Despite mounting strain, CMHC stressed that most homeowners continue to prioritize mortgage payments.
“Canadian households have been playing financial Tetris very well, adjusting their budgets and even making some sacrifices to make ends meet,” the report noted, while warning that rising unemployment historically turned manageable stress into missed payments.
A key safety valve has been borrower behaviour at renewal. “At renewal, most mortgage consumers chose to increase their amortization period to lower their monthly mortgage payments,” CMHC found, keeping near‑term payment jumps smaller than feared even as total interest costs climbed.
“Choosing longer amortizations” suggested that buyers were favoring short‑term affordability over long‑term wealth accumulation in an era of stretched house prices.
Regulation also plays a central role. CMHC underlined that a decade of tighter rules—especially the mortgage stress test introduced in 2016 and 2018 meant borrowers were qualified on the basis of higher hypothetical rates.
“Fast‑forward almost a decade, and recent trends show that the stress test has served its purpose,” the agency wrote, arguing that arrears have risen “gradually rather than sharply” despite aggressive rate hikes. That protection was not absolute, particularly in high‑priced markets and sectors hit by tariffs and job losses, but it helped avert a broader credit shock.
In a statement on the new research, CMHC deputy chief economist Tania Bourassa‑Ochoa said the renewal cycle forced households into difficult trade‑offs.
“While most Canadians have been resilient in facing significantly higher interest rates at renewal, this comes at greater long‑term expense, as the majority extended the length of their mortgages to lower their monthly payments and manage short‑term household finances,” she said.
“We are also seeing elevated financial stress for mortgage holders in Toronto and Vancouver, as well as pandemic‑era first‑time homebuyers, who have all seen the highest increases in arrears and carry more risk going forward.”
This article is part of CMP’s focus on Canada's renewal wave for February, spotlighting how mortgage brokers and lenders are helping clients face renewal challenges in 2026. Find all the rest of our special coverage here.
