Canadians are beginning to resume paying their mortgages, after many requested deferrals. Canada Mortgage and Housing Corporation (CMHC) broke down insured mortgage payment deferrals in August. At a national level, CMHC is seeing the rate of payment deferrals similar to the general market. Broken down by city, we see the most expensive markets are overrepresented. Even overrepresented, those higher rates seem relatively low compared to oil-driven markets.
Mortgage Payment Deferrals Across Canada
CMHC mortgage payment deferrals are falling, but they are still in-line with the general market. The CMHC reported mortgages on payment deferrals fell to 10.89% in August, down from 12.28% the previous month. Our estimate based on filings is 10.78% for the total mortgage market at Canadian banks. More bluntly, insured mortgage payments are deferred at a similar rate to the national average.
Canada’s Largest Real Estate Markets Are Still In Double Digits
Breaking down CMHC deferrals by market, we see the largest ones are mostly overrepresented. Toronto had 12% of mortgage payments deferred in August, Montreal 10%, and Vancouver 11%. Toronto is seeing payment deferrals much higher than the national average. Montreal is doing better, likely due to much more affordable prices. Vancouver is just slightly higher than the national number, but not by much.
CMHC Mortgage Deferral Rates By City
The rate of CMHC-insured mortgages on payment deferral in August. Source: CMHC, Better Dwelling.Prairie Real Estate Markets Have The Highest Rates
The Canadian Prairies have the highest rates of mortgage payment deferrals. Edmonton is the highest rate on the list, with 21% of mortgages on payment deferral. Calgary follows with 18%, and Saskatoon at 15%. Cheap real estate didn’t make much of a difference in these regions.
It’s important to remember most people that took mortgage deferrals didn’t need them. Since banks were readily providing them to almost anyone that asked, anyone that needed a few months of cashflow got it. The higher the rate though, the higher potential for local shock.
First, the number of people that needed mortgage deferrals are likely to be higher in regions where the rate was highest. Second, resumption of payments will send savings rates and spending lower. Any regions that saw a bump in spending from diverted funds, are likely to see that spending pull back.
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What’s going to be interesting is the number of people that claimed primary residence, rented it out, and then claimed deferrals. Lots of threads on how to “make” money that way, and I’m sure a lot of those people are left high and dry with falling rents.
This is why the government is pumping cheap mortgage credit, no? Get people to buy people’s distressed assets, before they realize it’s distressed. Very 2008.
Bank of Canada is going to negative interest rate first.
Then maybe to 0 Mortgage rate to pump up the housing market again.
And if that dose not work goes to negative mortgage rate so if you borrow you get some money back.
Macklem puts ‘dangerously over-leveraged’ Canadians on notice
https://www.bnnbloomberg.ca/macklem-puts-dangerously-over-leveraged-canadians-on-notice-1.1505447?fbclid=IwAR2jldPwmv2yoANR2dZwphlqHBKVSf_BY5oSBfWEt61lCK_u9Ym4WOxnUH0
It is funny their action is the reason for it, then they give warning too. Maybe is my uncle fault.
When you deal with criminals dont listen to what they say, watch their actions.
Propping up residential real estate is a crime against our nation, criminals must be punished.
In order to avoid the bubble from bursting they have to pump it more.
No worries. Our prime minister will bail everyone out. No risk in life these days.
JustInflation Trudeau.
Agian, people with multiple residential properties should NOT be allowed to defer. This proves the government will do anything to prop up this real estate bubble.
Propping up house prices is a crime against all Canadians.
Bail out from pocket of more than %50 of Canadian with less than $35000 gross income which they do not have any hard asset or house , and they have to deal with inflation of more than %20 a year on a daily purchase of food and necessities , because the government dose not want the rich people feel the pain. and transfer the pain it to average people.
My friend’s millionnaire relatives are showing off their brand new SUVs from the CERB and small business funds they all got over the past 6 months. Their businesses are doing just as well if not better… still earning over $100,000 a year, but just like before, claiming they only made less than $20,000 a year on their taxes so they don’t have to pay the government a dollar, and get access to child benefits and cheap health insurance meant for poor people. We, make under 40K, rent a basement, can’t even pay $20/month for poor people’s health insursnce, get less child benefit than our millionaire relatives, and pay taxes that go to ‘help’ such people ‘in these trying times’ as they airbnb around the province… fair?
You’re absolutely right. The system is broken and favors the rich. The tax code needs to be rewritten and simplified but they fear the rich will pack up and leave. I bet that they won’t with what’s going on in the world these days where else would they go?
You could report them to the CRA for a nice audit. Just saying. There is a tip line.
I have reviewed the comments left and although I don’t understand some, as they lack the origin of reference that would add perspective, I would like to respond and/or add a comment of my own.
I work with people who own multiple residential properties. They chose this type of investment to prepare for their future retirements. They are not entitled individuals, but everyday Canadians who chose an investment strategy which (like every strategy) comes with risks.
There are some bad ones(Landlords), but there are many good ones too, But as there are good and bad Landlords, there are good and bad Tenants too. Many, despite CERB and other financial support available to them, like LEAP, local housing retention programs, reduced Ontario Hydro rates, etc, chose not to pay their rents, using this pandemic as an excuse.
The reality is if these Landlords are equally affected by unemployment, due to the pandemic, then they likely don’t have the funds to pay their mortgage yet alone the mortgage on the Tenanted property, let alone the Taxes, Insurance or Maintenance.
More Landlords than people realize are just average Canadians, not big conglomerate corporations. If they don’t receive the rents from Tenants who view them as “entitled”, then they are very likely at risk of not having enough income to pay the bills, including the mortgage. Tenants who selficiously choose not pay their rent will potentially lose as well when the sheriff comes, not on behalf of the Landlord, but on behalf of the bank, to change all the locks as the bank has foreclosed on the property for failure to pay the mortgage.
With 6,000 applications currently before the Landlord Tenant Board (LTB) and the LTB running at 25% capacity and not even seeing post-Covid cases yet in some areas, people (especially those not paying their rent) should be grateful that some Landlords have been allowed to defer the mortgage payments. This is not propping the housing market, it’s preventing a foreclosure market.
In my opinion, what propped the current housing market is the simple economics of Supply and Demand. With the fear of Covid, Sellers were reluctant to list (creating low supply) and Buyers didn’t disappear, (and in some markets increased) due to an exodus from metropolitans.
Many (not yet all) markets are starting to show a year over year surplus. This trend is reducing the number or expediency of bidding wars. If this trend continues, it should level to a balancing of housing prices. If it extends long, it may result in a retraction of pricing. Only time will tell, along with many other outside factors I have not even mentioned….
No one feels sorry for someone who owns multiple properties when most people are just trying to keep the roof over their head. If your clients can not afford to pay the mortgages on those rentals then sell. That should add to supply.
Thats funny a bunch of boomers getting free health care provided by young people’s taxes and pension still talk about retirement?? How about young families suffering these crazy prices? Time to bring down housing price or there will be no young people to support you. Stop making up bs excuses for being greedy.
I do feel for young people but you can’t blame the boomers for benefiting from the market conditions that were in. They worked hard all their lives and paid their taxes just like everyone else. If anything it’s the governments failed policies that created the environment we’re currently in. This market should have crashed years ago so that it could have reset it but the powers that be did what ever they could to keep the party going and just kicked the can down the road so it could be the next guys problem. One way to fix this can be through taxation policy such as taxing equity take out refinancing of 2nd homes and investment properties which should slow down the property hoarders a bit.
I’m betting on 10 to 25 years fixed mortgages.