CMHC says mortgage risks remain as delinquencies creep up, alternative lending grows

Canada Mortgage and Housing Corporation (CMHC) has raised concerns about growing risks in the country’s housing market. In its latest report, CMHC highlighted a rise in mortgage delinquencies and the increasing reliance on alternative lending options. These trends suggest that Canadians are struggling to manage their housing costs amid high-interest rates and economic uncertainty.

Mortgage delinquencies, which occur when borrowers miss payments, have been creeping up across the country. While the overall delinquency rate remains low compared to past years, the steady rise signals potential trouble ahead. CMHC noted that higher borrowing costs and economic pressures are making it harder for some homeowners to keep up with payments.

At the same time, alternative lending has been gaining popularity. These lenders, who operate outside traditional banks, often cater to borrowers with lower credit scores or unstable incomes. While they provide options for those who might not qualify for bank mortgages, their loans typically come with higher interest rates and increased financial risk.

The CMHC report emphasized that the growth of alternative lending could add stress to the housing market. Borrowers using these services are more likely to face challenges if the economy weakens further or if interest rates stay high. This raises concerns about the long-term stability of the market and the ability of vulnerable households to manage their debt.

CMHC urged policymakers and lenders to monitor these risks closely. It suggested steps to improve financial literacy and ensure borrowers understand the risks associated with non-traditional lenders. CMHC also stressed the importance of regulatory oversight to protect consumers and maintain market stability.

As housing affordability remains a key issue in Canada, experts agree that the government and financial institutions need to work together. Balancing support for struggling homeowners with measures to stabilize the market will be crucial to avoiding a deeper financial crisis.