00:00:00:00

[Audio: Upbeat music plays.]

[Visual: A woman with long black hair, wearing a green blouse, is sitting in front of a microphone. A computer is open in front of her.]

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: If mortgage stress is still contained nationally, where are the pressures showing up?

00:00:06:05

[Visual: A white-haired man wearing glasses, dressed in a white shirt with a pink tie and sporting a moustache, is sitting in front of a microphone.]

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: I would say most of the pressures are really showing up in, shall we say, Southern Ontario and, and I'm including Toronto in that.

00:00:19:00

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Are there signs that households are starting to feel stretched earlier on?

00:00:23:14

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: When we're trying to understand the stresses in the financial system, we look at other types of lending as well, credit card, student loans, car loans and the rest of it.

00:00:33:19

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Where could mortgage pressure increase further and which regions should we be watching more closely?

00:00:40:03

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: If the economy performs reasonably well and there’s no massive, no significant increase in unemployment, I think the picture will remain as it is now.

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00:00:54:08

[Audio: The theme music plays.]

[Visual: An animation shows a series of houses being dismantled, rebuilt, and reoriented. A visual of a white magnifying glass appears in the centre of the screen, and a white rectangle forms around it. The phrase “Canada’s housing market” then appears in the box. The box then disappears. In the centre of the screen, white text appears that reads: “In-House – Canada’s Housing Podcast.”]

NARRATOR: You’re listening to In-House, Canada’s housing podcast, where we share the latest on Canada’s housing market.

[Audio: The theme music ends.]

00:01:09:09

[Visual: Mireille Thériault reappears on screen. A box with the text “Mireille Thériault, Specialist, Communications, CMHC” appears briefly in the lower right corner of the screen.]

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Mortgage stress remains unchanged nationally, but that doesn’t mean homeowners are feeling the pressure equally. Who is most affected by rising financial pressures? If we look beyond mortgages and zero in on other signs of financial stress, what do we uncover? Welcome back to In-House. I’m your host, Mireille Thériault. Today, we’re unpacking the latest residential mortgage industry report with our Deputy Chief Economist, Aled ab Iorwerth.

00:01:38:22

[Visual: In a studio, Mireille Thériault and Aled ab Iorwerth are sitting across from each other in brown leather armchairs. On the back wall, between the two guests, is a screen displaying the show’s title: “In-House – Canada’s Housing Podcast”]

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Welcome, Aled. Thanks so much for joining us for another episode.

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: Good to be with you again.

00:01:44:05

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Mortgage stress remains unchanged at the national level, but there are regional vulnerabilities and early signs of financial stress still present. If mortgage stress is still contained nationally, where are the pressures showing up?

00:01:58:21

[Visual: A box with the text “Aled ab Iorwerth, Deputy Chief Economist, CMHC” appears briefly in the lower left corner of the screen.]

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: I would say most of the pressures are really showing up in, shall we say, Southern Ontario, and I’m including Toronto in that. So, mortgage arrears are going up in that area, possibly linked to trade challenges. So that is something that we’re monitoring very closely, what is going on in that area. I think in the rest of Canada, we are also monitoring a little bit in Vancouver, but the rest of Canada, it’s generally okay. Now, having said that, we’re monitoring the situation closely. The trends are not outside of the historical norms, going back as far as we have data, so it still looks contained, but there’s a bit of a challenge that it’s going in one direction at the moment, so an uneven picture across the country.

00:02:50:13

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Mortgage arrears tell us part of the story. But before mortgage arrears rise, are there signs that households are starting to feel stretched earlier on?

00:02:59:09

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: Exactly. I mean, everybody in Canada wants to really pay their mortgage. They care about their house. They want to live in their house. It’s an extremely important asset. They’ve got a lot of their wealth tied up in housing. So, the last thing they’re going to do is to not pay their mortgage. They’re going to want to continue. So, that’s when we’re trying to understand the stresses in the financial system. We look at other types of lending as well, credit cards, student loans, car loans, and the rest of it, because households may be more willing to forego their car rather than their house. And so, that’s why we’re monitoring those earlier credit signals. Now, unfortunately, delinquencies in those areas are going up. But they’re still within historical patterns. So again, it’s something to be monitoring and be concerned about. But at the moment, we don’t see it as being outside of historical norms.

00:04:01:11

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: The RMIR looked at mortgage investment entities, MIEs. Can you walk us through what you’re seeing there, particularly in the Greater Toronto and Hamilton area?

[Visual: A box with the text “Subscribe” next to a bell icon briefly appears on the screen.]

00:04:11:07

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: Sure. So, when you look at the financial system, you can think of it in several parts. So, you have your traditional large banks, the credit unions and so forth. So that is the majority of where Canadians go to get their mortgages and their loans. But there are other parts, other corporations that lend money as well, which are called the MIEs, as you said, or some call them MICs. Now, they don’t have... They tend to lend to people who perhaps don’t have as good a credit history, perhaps who are new to Canada. So, they’re a different set of lenders from the traditional banking sector. And here again, we’re seeing arrears and defaults go up, which is a concerning side. As you said, it seems to be concentrated in Southern Ontario, in the Toronto area. The arrears rate are [sic] quite high in this area, but I have to emphasize this is a very small part of the overall lending system. Very roughly, it’s less than 2% of the entire lending structure. But arrears in that area, they’re concerning, but at the moment, the size of the sector suggests that it’s not going to create any systemic problems.

00:05:34:03

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: We’ve talked about where stress is building. How are borrowers and lenders adjusting as these risks evolve?

00:05:41:08

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: I think borrowers are really trying to do everything to keep their monthly payments down. They’re looking at alternative mortgage products. Some of their behaviour will be reducing spending so that they can service the mortgage more easily. But we are also seeing trends in what they’re choosing to do with the mortgage. The one I’m paying a lot of attention to is the tendency to move away from the traditional five-year fixed mortgage and move towards more variable rate mortgages or move to those mortgages with terms of, say, two to three, four years. So, I think this is again something we’ll have to pay close attention to, because there is a risk that interest rates are higher than people expect and that when you have shorter term mortgages you will have to reset or the amount of mortgage payments that you have to service will be going up. There’s a risk there. But the shorter-term mortgages do end up with a lower monthly payment at the moment, so there’s a delicate trade-off in there.

00:06:55:15

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Looking ahead through mid-2027, where could mortgage pressure increase further and which regions should we be watching more closely?

00:07:05:08

[Speaker: Aled ab Iorweth, Deputy Chief Economist — CMHC]

ALED AB IORWERTH: A lot of the tensions on the international side will have to be monitored quite carefully. Certainly, there are areas of Canada that are quite exposed on the trade side. I’m thinking in particular of Southern Ontario, parts of Quebec. So that is an area to be monitoring closely. But I think it ties into the overall macroeconomic situation. If the economy performs reasonably well and there’s no massive, no significant increase in unemployment, I think the picture will remain as it is now. But again, there are these risks out there relating to the macroeconomy.

00:07:48:13

[Speaker: Mireille Thériault, Communications Specialist — CMHC]

MIREILLE THÉRIAULT: Thank you, Aled, for walking us through the Residential Mortgage Industry Report. The big takeaway? Mortgage stress remains contained nationally, but the pressure isn’t being felt equally. As we watch how mortgage delinquencies evolve through mid 2027, regional differences will remain important. Keep an eye on our channel for updates. Thank you for joining us In-House.

[Visual: In a studio, Mireille Thériault and Aled ab Iorwerth are sitting across from each other in brown leather armchairs. On the back wall, between the two guests, is a screen displaying the show’s title: “In-House - Canada’s Housing Podcast”. A box with the text “Subscribe” next to a bell icon appears briefly on the screen.]

00:08:12:02

[Audio: Upbeat music.]

[Visual: White text appears on the screen: “In-House - Canada’s Housing Podcast”, superimposed over black townhouses against a red and blue background.]

00:08:13:08

NARRATOR: Did you know we’re not just on YouTube? You can now find us on Spotify, Apple Podcasts, and Amazon Music

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00:08:20:13

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00:08:39:23

[Visual: The Government of Canada logo and the CMHC logo appear on screen in a white background and then fade away.]

00:08:46:11