Pandemic-era first-time homebuyers are emerging as the borrower group most likely to fall into mortgage arrears as higher interest rates collide with elevated debt levels, according to the Canada Mortgage and Housing Corporation.

Borrowers who bought homes during the pandemic or shortly afterward are particularly vulnerable because many purchased at peak prices, took on large mortgages relative to income and now face sharp payment increases as their loans renew at much higher rates, wrote Tania Bourassa-Ochoa, a CMHC deputy chief economist, in an update.

First-time buyers also tend to have limited home equity, reducing their financial flexibility if budgets come under strain .

While these borrowers are still, on average, missing payments less often than homeowners overall, Equifax data shows arrears are rising faster among pandemic-era first-time homebuyers than other groups, signalling growing stress as the mortgage renewal wave progresses, Bourass-Ochoa noted.

More broadly, CMHC reports that the national mortgage arrears rate has been increasing since late 2023, though it remains historically low. Arrears rose about seven basis points between the third quarter of 2023 and the third quarter of 2025, reflecting mounting pressure from higher borrowing costs and a softer economic backdrop .

The agency’s analysis projects arrears will continue to rise moderately through late 2026, with the strongest growth expected in Toronto and Vancouver. Toronto is forecast to see the most persistent increase due to high household debt, investor exposure, weaker resale conditions and a softer local labour market, while Vancouver is expected to experience a steadier but more moderate rise .

In other regions, Bourassa-Ochoa said, delinquency risks remain more contained. Montreal’s outlook is relatively stable, while Calgary faces moderate risk and Edmonton is more exposed because of labour market sensitivity. Ottawa, Winnipeg and Halifax are expected to see smaller increases tied to local economic conditions and credit use .

Despite the upward trend, she emphasized that mortgage arrears remain well below levels seen in past downturns, supported by borrower resilience, income growth until recently and regulatory measures such as the mortgage-stress test, which helped ensure borrowers could withstand higher rates when they qualified for their loans .

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