Even more households are falling behind on their supersized mortgage payments. Canadian Bankers Association (CBA) data shows the mortgage arrears rate climbed in May. Mortgages at least 90 days past due have more than doubled since 2022, pushing the rate just shy of a decade high. New mortgage originations are also failing to offset outflows, already wiping out most of 2020’s low-rate growth.
Canadian Mortgage Arrears Rate Nears 10-Year High
Canadian bank mortgage arrears rate: share of mortgages at least 90 days past due.
Source: CBA; Better Dwelling.
The mortgage arrears rate inched 1 basis point (bp) higher to 0.29% in May, adding 7 bps since last year. Since hitting a record low of 0.14% in 2022, the rate has more than doubled to its highest level since August 2016. Unlike the anomaly in 2016, which only lasted one month before trending lower, the current rate is steadily climbing.
Canadian Bank Mortgages Hit Recession Levels
Canadian bank mortgages in arrears: the number of mortgages at least 90 days past due.
Source: CBA; Better Dwelling.
The mortgage arrears count rose 2.3% to 14,061 in May, up 27.2% from last year and the most since 2014. However, annual growth is the detail worth paying attention to, as only one month in the past decades has been bigger (August 2024). This growth rate was last consistently seen between 2008 and 2010, and is rare outside of a recession.
Canadian Banks Have Seen Most Pandemic Mortgage Gains Fade
Canadian bank mortgages: total mortgage count at CBA members.
Source: CBA; Better Dwelling.
Canadian banks saw the number of mortgages they hold fall for an eighth straight month. The mortgage count slipped by 893 mortgages to 4.93 million in May, 0.8% (-40.3k) lower than last year and 3.7% (-190.6k) below the August 2022 record high. They now hold the fewest mortgages since October 2020, reversing most of 2020’s low rate boom.
It’s also common for Canada’s banks to sell or refuse to renew mortgages for those with a spotty repayment history. Risky borrowers are often pushed off bank books to less visible B lenders. This means the data we just discussed is optimized to look better than reality, and it doesn’t look pretty as-is. Reality is likely a lot worse than these numbers reveal.
How many of these delinquencies are investors who the banks inflated appraisals for, trapping them from being able to liquidate?
The speculators who bought worthless condos in torpnto or vancouver are being protected by the feds. The appraisals and extension of chmc loans to them means the banks dont really care if the default.
The big problem iz almost everyone is under serious payment pressure today. Between insurance taxes utilities, condo fees are killing.people.
Every indicator is at recession levels, but don’t worry because GDP includes the fake rents homeowners would pay themselves if they were their own tenants, and inflation data is cooked, so there’s plenty of growth!
Canada cpi is not ever very accurate as they understate interest expense by a large margin. Since canadas consumers are spme of the most indebted on eartg, this means cpi is not reqlly valid.
The other problem is cpi is cumulative. So if its 8% for 2ys and then drops to 3% the net impact is not offset, youwould have 8%, then 8% on the 108, so 117% and then 121.5% higher than the price in year one.
Also not properly measurong interest or housing cost meqns that cpi is jist a made up number.
The best measure of inflation is to conaider how much the m3 is expanded vs gdp and inflation is the inverse of that. So canada more than dpubled its m3 since 2014, and gdp barely moved, so the deflation of the ddollar is about 100% in that time.
Don’t focus on the losers who can’t pay their mortgage. 99.7% of mortgage borrowers are paying on time!
Legit the dumbest take possible. Thanks for this.
Article is trying to sound the alarm on nothing. Look at the full chart from CBA.
https://cba.ca/article/mortgages-in-arrears
The neighbour next door has a friend who has done foreclosures forever. He said he has more foreclosures to work on than he’s ever had. He’s elderly too, so maybe he isn’t given the brunt of the work. ITs tough work, because people are losing their homes.
The real estate slide towards the cliff edge is building.