Canada’s recent real estate boom—and bust—was followed by an immigration surge charting a similar trajectory. Together, they expose generous high-leverage mortgage programs that shift risk off lender books and onto public and private insurers. These programs enabled buyers with minimal credit and few local ties to purchase homes at peak prices. With values now plunging, the lack of transparency raises questions about how these will perform—and whether the loans amplify the market’s downside risks.
Welcome To Canada—Would You Like A $1M Mortgage?
Canadian mortgage insurers have long de-risked lenders issuing high-leverage loans to recent immigrants. These programs allow newcomers to buy a home with as little as 5% down, even without a Canadian credit history. Properties can have up to 4 units, but one must be owner-occupied. Only 2-unit properties can use projected income in the application.
Newcomers face the same Catch-22 as young Canadians: no credit history means no credit access—and vice versa. But with mortgage insurance covering the lender’s risk, it’s easy to say yes. After all, the borrower foots the bill anyway.
The program brochures lead with prime credit as a requirement, but they also allow alternative documentation. This includes international credit reports, bank statements, or just proving the payment of basically any bill a household pays for 12 months.
“…Examples of payments included but are not limited to rental payment, utilities, cable, phone, auto insurance, childcare, or documented regular savings.”, Sagen’s New To Canada Program.
Questions about risk should emerge right in the stated loan maximums. The maximum home value is $1.5 million, if the loan-to-value (LTV) is 80% or higher. Below 80% LTV and the max property value drops to $1 million. That’s not a typo: lenders restrict higher-value homes only when they bear the risk, not the insurer.
All three of Canada’s mortgage insurers offer near-identical programs: CMHC’s Newcomer Program, Sagen’s Newcomer To Canada Program, and Canada Guaranty’s Maple Leaf Advantage.
These aren’t new, but amid an immigration surge and post-speculative housing market, there should be serious questions about the transparency of these risks.
Canada Tried To Offset Monetary Tightening With Immigration
Canadian real estate prices vs population growth (y/y, %).
Source: CREA; StatCan; Better Dwelling.
Before we get to the risk, let’s recap the actual timeline—the data, not your uncle’s rants on X.
Home prices peaked in Q1 2022 at $851,600, up 26% year-over-year (y/y), hitting a record just as the first rate hike of the cycle landed at the end of March. The timing wasn’t a coincidence—and neither was the immigration pivot that followed.
In the same quarter, population growth hit 1.3% y/y, adding 105,100 people in just that quarter—about half the pace of 2019. By Q4 2022, Canada added 334,000 people—nearly 50% above pre-pandemic levels. The surge peaked in Q3 2023, with the population adding 418,600 people in a single quarter.
Most of that growth came from temporary residents. In Q1 2022, the 12-month net gain was just 97,800—half of 2019’s pace. But it doubled by the next quarter, and by Q1 2024, hit a staggering 850,400—nearly 9x the Q1 2022 level. Between Q1 2022 and Q3 2025, the temporary resident population more than doubled (+118%) to 3.02 million.
For those who need a monetary policy refresher: low rates pull demand forward, increasing leverage and allowing borrowers to use future income for today’s consumption. Higher rates push demand out, ideally stabilizing consumption. However, instead of allowing normalization, policymakers used immigration to generate demand, offsetting any temporary GDP drop and preserving the optics. It also neatly aligned with Canada’s geopolitical interests.
Canada’s High-Risk, Low-Visibility Mortgages Present A Real Threat
Canada’s insured mortgage demand had been slipping for years—until recently. Quarterly originations hit a low of $11.3 billion in Q1 2023, but surged to a 4-year high of $29.3 billion in Q2 2025, close to tripling from the low. It’s unclear how much of the resurgence is tied to newcomers—but that’s the problem. These high-leverage loans come with real risks, yet there’s no transparency on volume, performance, or exposure.
At the same time, home prices have plunged. As of Q3 2025, the price of a typical home is down to $682,600, a drop of 19.8% (-$169,000) from the 2022 peak. Peak buyers with a high-ratio mortgage are likely sitting on little to no equity. Hopefully, temporary residents top up their equity if they decide to leave, as many are eligible for these programs.
Labour market stress adds another layer of risk. When Canada shifted its immigration policy in Q2 2022, the unemployment rate for recent immigrants was around 7%, already a point above the national average. The rate surged to nearly 12%, double the national average, according to the Bank of Canada. Dismissing a material and quantifiable risk isn’t about equality; it’s about risk transfer.
These programs are designed to address a real issue: newcomers face systemic credit barriers, much like young adults in Canada. However, in their current form, these programs aren’t designed to enable access—they transfer risk from lenders to insurers, often with backing from taxpayers. Lenders get the volume, rising prices, and zero exposure to any of the risks. Insurers absorb the risks and pass the cost to end users, either through taxes or higher premiums.
If these risks emerge, the impact won’t be limited to the borrowers and lenders. They’ll compound with issues like artificially inflated asset values backing loans, and deliver a shock to the whole economy.
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