credit and debt
03. credit & debt Low unemployment and interest rates have conspired to keep BC’s mortgage arrears rate at historically low levels.
BC’S ARREARS RATE LOW AS ALBERTA’S CONTINUES TO GROW
During challenging economic times, households are much more likely to default on things like credit cards, lines of credit, and car loans than they are the mortgage on their principal residence. Considering that a deterioration of mortgage market conditions (vis-a-vis rising mortgage arrears rates) would signal that economic conditions were already well on their way to the land of gloom. Then why consider trends in mortgage arrears rates if by the time they’ve moved up economic damage has already been inflicted? Quite simply, it remains useful to evaluate trends in mortgage arrears for not only what they do show, but also for what they don’t show. Currently at 0.14% (down from 0.39% five years ago), the trend in BC’s mortgage arrears rate shows a stable mortgage market that is buttressed by borrowers who can afford their payments in the current interest rate
environment. Conversely, the province’s mortgage arrears trends don’t on their own belie any simmering economic potholes with the province’s arrears rate remaining virtually unchanged for the past two years. The low and declining arrears rate in BC tracks well with the province’s unemployment rate, which by the end of Q3 (the latest date for which we have arrears data) stood at 4.4%. Given that the unemployment rate came up slightly into November, it might be reasonable to expect the arrears rate to (at worst) move up slightly or (at best) not change from its current level. Having said that, both the unemployment rate and mortgage rates are expected to remain at or near their current levels through 2020. Translation: expect continued stability in our mortgage market over the next 12 months.
24
rennie.com
Made with FlippingBook - professional solution for displaying marketing and sales documents online