Canada

Canadian Seniors Are The Only Demographic Seeing Higher Mortgage Delinquencies

Canadian mortgage delinquencies are fairly boring these days, until you drill down and look at the demographic shift. Canada Mortgage and Housing Corporation (CMHC) data shows mortgage delinquencies were flat in Q3 2020. When looking at their age breakdown though, it shows delinquencies on mortgages held by seniors is soaring. Balancing out the statistic is a lower rate of Millennials turning delinquent, making the stat appear like a wash.

Canadian Mortgage Delinquencies Are Flat 

Canadian mortgage delinquencies haven’t moved much at the macro level. The rate of delinquencies is 0.30% for Q3 2020, flat from both the previous quarter and last year. It’s a little elevated since the 2018 lows. However, it’s generally stable, even considering the pandemic. Breaking these numbers down by age shows a slightly different trend.  

Canadian Seniors With Delinquent Mortgages On The Rise 

The mortgage delinquency rate for Canadian seniors is climbing, and is at the highest level in years. The rate reached 0.37% in Q3 2020, up 2.78% from the previous quarter. That represents an increase of 5.71% compared to the same quarter last year. Delinquencies for senior homeowners haven’t been this high since 2017. Interestingly, this is the only age group to see the rate of delinquency actually rise. The rate is also significantly higher than the national rate, showing overrepresentation for the demographic. 

Canadian Mortgage Delinquencies By Age of Holder (Change)

The 12-month change in the rate of mortgage delinquencies by age of holder in Q3 2020.

Source: CMHC, Better Dwelling.

Canadians Aged 45 to 64 See Flat Movement On Delinquencies

Canadian mortgage holders between 45 and 64 years of age were relatively stable. The rate of delinquencies for people aged 55 to 64 reached 0.28% in Q3, flat from the previous quarter, and a year before. Those between 45 and 54 reached a slightly higher 0.30%, flat over the same periods as well. The rate for these age brackets are off multi-year lows, but are generally stable. This demographic is just below the average. 

Millennial Mortgages Make A Drop In Delinquencies

That leaves middle aged and younger households with the reduction in rate, to balance out rising levels in seniors. Mortgage holders between the age of 35 and 44 had a delinquency rate of 0.30% in Q3, flat from the previous quarter. This rate is actually 3.23% lower than the same quarter last year. This demographic is right at the national average. 

Millennial homeowners aged 25 to 34 saw an even larger decline in the rate of delinquencies. That rate fell to 0.25% in Q3, flat from the previous quarter. Compared to the same quarter last year, it’s 7.14% lower. Still off of the multi-year low, but significantly below the national average. 

On the surface delinquency rates seem like nothing is changing, but the demographic rotation is being ignored. Older homeowners are seeing their mortgages turn delinquent, despite programs designed to mitigate the issue. Younger borrowers, interesting enough, are turning delinquent at a lower rate. The decline in millennial homeowner delinquencies are likely due to higher prices requiring rock solid finances. 

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18 Comments

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  • Lawrence J 2 weeks ago

    How do you default in 2020/21? The government and banks are making it so it’s almost impossible, and sales are roaring. If you’re a senior that can’t pay, you just list and sell the house you bought for 5 figures for 7.

    • Mortgage Guy 2 weeks ago

      The bank most likely tried to give them every option, and they didn’t take it for some reason or another. Trust me, banks don’t want your house. They want the monthly payments plus interest

    • Enough Already 2 weeks ago

      For some seniors, they would have dipped into their HELOC to help their kids with a down payment. For other seniors, they may have opted for a reverse mortgage with the bank. Both of these would eat into the equity. Add onto that, if they own strata and sell, there’ll likely be age restrictions, taking out younger buyers.

    • SH 2 weeks ago

      Your suggestion is logical, Lawrence. But you need to understand that you’re talking about the most selfish generation in Canadian history. You see, they want to stay in the big house forever while simultaneously “selling” it to get the money. Hence, reverse mortgages. One final f-you to the Millennials. The Boomers will spend it all and leave the bills to their kids.

      • B.Y 2 weeks ago

        Good one SH.

        Boomers might have grown up in good times, but they also put in the work. Millennials are the most spoiled generation by far and it becomes very apparent in the work place.

        Selling isn’t much of an option either since it simply puts them back into the marketplace as buyers. Downsizing isn’t that simple in this climate

        • Liam 2 weeks ago

          There’s a study on Stats Can that actually confirms Millennials have more education, work more hours, and make significantly more than any previous generation.

          Due to higher taxes and cost of living, its wipes out any advantage that extra income provided. So your take is quantifiably untrue, according to the government.

        • SH 2 weeks ago

          As mentioned above, your caricaturish claims about Millennials are demonstrably untrue. The Boomers will take out far more from the welfare state than they put in. With Millennials, throughout their lives, it will be the opposite.

          One of those two generations got dirt cheap housing, dirt cheap education, rising salaries, low immigration (no wage suppression). Which one benefited from those advantages, Mr. B.Y? Now in their old age, the advantages continue as corrupt governments artificially prop up their unearned RE wealth while young people are forced to live in tent cities.

  • SH 2 weeks ago

    The current crop of seniors is the wealthiest age cohort in Canadian history. If they couldn’t sort out their finances amidst a 40-year bull market in real estate, stocks, AND bonds, aided and abetted by criminal central banks, not to mention dramatically rising salaries between 1980-2005ish (beyond 2005 too if they were in executive roles), then it’s on them. Don’t expect younger people with not even fraction of their luck to bail them out.

    Declare bankruptcy and live within your means, elders,.

  • Tony Whitaker 2 weeks ago

    The millennial cohort started in 1981/82 so are now 39 or 40 years old – and ended in 1997

  • Rob 2 weeks ago

    Those crazy seniors
    With their fancy cruises and designer walkers
    Why can’t they live within their means

    • SH 2 weeks ago

      Indeed. Young Canadians should advise them to stop eating avocado toast.

  • straw walker 2 weeks ago

    And Senior CDNs are the only sector in the economy that the BOC has NOT shown any notice too.
    Low interest rates have destroyed their ability to maintain any kind of income from their savings.
    This has left a whole generation of seniors, using reverse mortgages or heloc loans to subsidize their income…hence mortgage failures

    • B.Y 2 weeks ago

      Not sure why no one (here) else is seeing that.

      Seniors and their fixed incomes have been neglected by the government, which is much more interested in keeping those who hold the most debt in this country on a subsidization IV.

      • Rob 2 weeks ago

        Seniors think the world owes them risk free returns now
        Get out on the risk curve and hodl your stonks like everyone else

  • jason 2 weeks ago

    @Mortgage guy The banks could sell the house and keep the principal they paid on it plus get the sale price.
    Why would that deter a bank from doing that and making even more.

    • Marko 2 weeks ago

      That’s not how the power of sale process works. The lender can’t steal your equity.

  • Paul 2 weeks ago

    I’m reading a lot of blame game here. This is the way I see it. Reverse mortgages were insidious and should never have been allowed to exist. It’s a losing proposition and no one talks about what happens if the seniors are forced to sell their homes. Until 2012 the company that had a monopoly on reverse mortgages was public. Then it was bought by a conglomerate and de-listed. If you research it’s a fascinating time line. Couple that with low interest rates and it looks like a good deal. But it’s not as BD has reported many times. They can sell and should be a lot of promises were made to them that have no been kept up, I.e. pensions and savings not beating inflation.

    Although there is a difference between the generations we are all in this together. I don’t think it’s fair to blame any particular group as we all suffer from poor govt policy that is meant to head all of these problems off before we face them. This includes the bubble, low interest rates which hammers us at the stores and mounting debt. We need to keep the dialogue going and stop the infighting.

  • Rob 2 weeks ago

    Hey data guys – this is great. Interesting to get the demographics cut, but I’m always curious to dig deeper. Do your data sets provide any regional visibility? Also any chance you’d be willing to share the underlying data so readers can self explore?

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