The Canada Mortgage and Housing Corp. has identified increased financial strain among homeowners in Vancouver and Toronto, as missed mortgage payments are on the rise. Particularly, first-time buyers who entered the housing market during the COVID-19 pandemic, when interest rates were favorable, are showing heightened vulnerability.
Despite the uptick in missed payments, current rates remain historically low. To alleviate financial pressure, some borrowers are extending their mortgage terms to reduce monthly payments.
According to CMHC data, over 1.5 million households have renewed mortgages at higher rates, with an additional million expected to follow suit in the upcoming year.
Tania Bourassa-Ochoa, Deputy Chief Economist at CMHC, notes that many Canadians have demonstrated resilience in the face of rising interest rates during mortgage renewals. While extending mortgage terms may provide temporary relief, it could lead to greater long-term costs.