Toronto Real Estate Is Following Canada’s Climbing Mortgage Delinquencies 

Canada’s largest real estate market is finally beginning to show some cracks. Equifax data reveals that Toronto mortgage delinquencies climbed again in Q1 2023. It’s inline with national data, which revealed increased mortgage delinquencies across the country. Normalization is expected after hitting record low rates, but it’s surprising to see since lenders are going to such extremes to avoid it. 

Toronto Real Estate Is Facing Rising Mortgage Delinquencies

Toronto real estate has found the bottom for mortgage delinquencies, and they’re back to climbing. The reported delinquency rate was 0.08% of mortgages in Q1 2023, and marked the second consecutive quarterly increase. The rate is now at the highest level since Q3 2021, which isn’t all that high, or far back. However, it shows that not even Toronto is immune to the national trend. 

Canadian Mortgage Delinquency Rate

The share of mortgages at major lenders that were reported to be at least 90 days past due. 

Source: Equifax; CMHC; Better Dwelling.

Rising Mortgage Delinquencies Are A National Trend In Canada 

We recently noted that mortgage delinquencies found a bottom at the national level. Equifax data shows 0.15% of mortgage accounts are delinquent in Q1 2023, the first increase to the rate in years. It’s not particularly high, but lenders are going to extremes to avoid marking mortgages as delinquent. 

Over the past few years, the delinquency rate has dropped to unhealthy levels, contributing to market inefficiency. Normalization of the rate was expected, but it’s occurring while accommodations are being made. This may indicate a much bigger problem brewing. 

Key Markets Like Montreal & Vancouver Remain Resilient

Canadian mortgages are moving towards higher delinquencies, but two key markets bucked the trend. Both Montreal (0.09% delinquency rate) and Vancouver (0.08%) continued to record low delinquency rates in Q1 2023. Montreal is at nearly a third of the rate it entered the 2020s with, while Vancouver is nearly half. These markets have remained sufficiently liquid, despite rising rates. 

Toronto, and Canada as a whole, aren’t reporting particularly high delinquency rates. As stated before, they were also at unusually low rates, with normalization to healthier levels inevitable. However, a rising number of people falling behind on payments when lenders are granting virtually unlimited repayment lengths, and prices climbing tens of thousands per month, is unusual. These should be strong mitigating factors, but cracks are still appearing—even in Toronto, the world’s biggest real estate bubble

8 Comments

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  • Trader Jim 11 months ago

    In before someone says it’s lower than the US, not realizing Canada reports 90 days past due while the US reports 30 days.

    • Gerry 11 months ago

      The whole narrative in Canada’s reporting is ridiculous (to say the least).

      – If you can’t pay, they’ll just extend your mortgage term.
      – No reporting from subprime lenders, which are all private securitization
      – stats only involve the largest banks and credit unions.

      versus the US reporting everything. It’s easy to be 2 points lower than the US if 1 in 10 mortgage dollars are at non-reporting, high risk subprime lenders.

  • Tenson Flow 11 months ago

    still lower than 2019?

  • Yussef 11 months ago

    All of my professional friends are moving to formerly second tier cities like Calgary and Guelph. They really bunged up the city, and a city where 10 immigrants cram into a 1-bedroom condo to fund the retirement of boomers isn’t going to last very long.

  • Brent MacKInnon 11 months ago

    The real issue is that the banks have refused to abide by the law when it comes to amortization periods. The law is that banks can offer a maximum of 30 years. According to this website, up to 25% of all mortages have been extended beyond 30 years in contravention of the law. The reaosn for this is so that banks can hide from the inevitable correction. If a bank did this in the USA, they would prosecute them. In Canada, we sit on our hands and let the big corporations do what they want. However, this time a reckoning is coming.

  • Broker Bob 11 months ago

    I just had a neighbour that actually moved back to RUSSIA, believe it or not, because he could no longer see a quality of life or decent future here for his wife and 2 children. He had been here for over 7 years and had a good job but did not own a property. He said it is now unaffordable to live in Canada.
    I know a Dental hygienist with a good career making great money and she is planning to move back to Poland because she also finds life unaffordable here.
    All youth are angry because they know they will never be able to afford a home and are heading to the east coast, the states or to cheaper destinations in Europe.
    This narrative will continue until many new measures are brought in to bring down the cost of living.

  • Question Guy 11 months ago

    delinquencies always go down before a crash.
    this rise is probably all B-lenders, who are not renewing the riskiest mortgages on their books.

  • Eddie 11 months ago

    I wonder if the comments of this analysts benefits the interest of the bank . I don’t think they would comment against the banks interest . In the end they get paid from the bank they represent.

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