The risk profile of the segment also increased slightly compared to 2022, the Crown corporation said, but its risk level remains “relatively low” compared to the years prior to the COVID-19 pandemic.
CMHC indicated that alternative lenders could see capital availability diminish in the coming quarters as investors turn their attention towards other lucrative investments, “with less or no exposure to our housing markets.”
Mortgage arrears continued to rise for non-bank lenders and mortgage investment entities but stayed stable for chartered banks and credit unions. While those rates have not risen dramatically compared with the years before 2020, CMHC nonetheless said recent increases “suggest continuous monitoring is necessary.”
Delinquencies for credit cards, lines of credit, and auto loans continue to rise, indicating that more Canadians could become delinquent on their mortgage payments in the future.
— CMHC (@CMHC_ca) November 9, 2023
Longer amortizations, slowing activity evident in traditional space
Among traditional lenders, purchase and refinance activity slowed noticeably. Chartered banks saw a 44% drop in the issuance of mortgages to buy a home, while refinances dropped by 34% compared with the same period in 2022.
That decline in purchase activity unsurprisingly arose as a result of a milder housing market, while CMHC said refinances had waned because of higher rates and stationary home prices reducing available equity.