credit and debt
IS A RISE IN ARREARS A THING TO BE FEARED?
Metro Vancouver’s mortgage delinquencies remain near historic lows. Time to consider what the near-term outlook is as the mortgage deferral window closes.
First, some perspective: Metro Vancouver’s mortgage arrears rate (defined as the share of all outstanding mortgages that are three or more months behind in their payments) most recently stood at 0.15% in Q2 2020, meaning 15 out of every 10,000 outstanding mortgages were delinquent. This is a small proportion by any measure, is roughly half of the Canadian average, and is very near its historical low. The concern going forward has two related parts. First, over the past two years Vancouver’s arrears rate has risen to 0.15% from 0.10%—a 50% increase.
More importantly, as we look ahead to the balance of 2020 and into 2021, the question is whether or not this trend will continue, especially in light of the mortgage deferral window closing within the next six months. According to the big banks, virtually all mortgages on deferral that were scheduled to restart payments by this point in time have done so. This is good news, but should this trend not continue, we may see an elevated level of housing inventory in the coming months along with a moderate slowdown in the pace of price appreciation. Ultimately, only time will tell.
MORTGAGE DELINQUENCIES LOW AND STABLE
0.45%
0.38%
0.40%
0.35%
0.35%
0.30%
0.28%
0.29%
0.25%
0.25%
0.20%
0.17%
0.15%
0.15%
0.11%
0.10%
0.05%
0.00%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
MONTREAL
TORONTO
VANCOUVER
CANADA
DATA: PROPORTION OF ALL OUTSTANDING MORTGAGES THAT ARE THREE OR MONTHS IN ARREARS
SOURCE: CANADA MORTGAGE & HOUSING CORPORATION
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