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 CityThe 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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