credit and debt
NO, ARREARS, WE’RE IN THE CLEAR (WE THINK)
Despite what could have been a most turbulent time for housing in Canada, arrears rates remain near historical lows.
When the pandemic hit Canada in earnest in March 2020, one of the big fears that occupied the minds of policy-makers, banks, and homeowners was the possibility of mass mortgage defaults, should the economic downturn persist in the absence of adequate government support. This was a justifiable fear given both the evolving circumstances and the experience of the previous economic downturn, the Great Recession of 2008/9. Fortunately, household subsidies were complemented by a mortgage deferral program offered by Canada’s big banks,
which essentially allowed for the suspension of mortgage payments for a period of up to 6 months for in-need households. In hindsight, this program likely played a key role in stabilizing the ownership market. Nevertheless, arrears rates across Canada did rise through 2020; notably, however, the increases were minimal overall, with BC’s most recent arrears rate sitting at only 0.15% (Canada was at 0.22%). With the mortgage deferral program now all but wound down, arrears rates are likely to stabilize at their currently low levels. What a relief.
AFTER YEARS OF DECLINES, THE ARREARS RATE CLIMBS
0.06%
APRIL
0.04%
0.02%
0.15% 0.10%
0.00%
0.22%
-0.02%
-0.04%
-0.06%
-0.08%
-0.10%
-0.12%
Nov 2015
Nov 2016
Nov 2017
Nov 2018
Nov 2019
Nov 2020
CANADA
BRITISH COLUMBIA
ONTARIO
DATA: YEAR-OVER-YEAR PERCENTAGE-POINT CHANGE IN THE MORTGAGE ARREARS RATE
SOURCE: CANADIAN BANKERS’ ASSOCIATION
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