credit and debt
FALLING HOME PRICES, BUT THAT’S NO DEFAULT OF OURS
As with other types of debt, mortgage arrears rates (those mortgages that are three or more months in arrears as a share of all outstanding mortgages) move cyclically with the unemployment rate. Do you have a job? Are you earning an income? Then chances are you are paying your mortgage. That’s the general rule of thumb, and this was evidenced by the recent uptick in BC’s unemployment rate early in 2019 and the knock-on effect it had on the arrears rate.
Specifically, while the provincial unemployment rate rose from 4.3% to 4.5% by the end of Q1, BC’s mortgage arrears rate rose from 0.14% to 0.15%. These are small changes to be sure, and provincial mortgage arrears rates remain historically low, but maintaining a dynamic economy nationally, provincially, and more locally is a key component of ensuring our housing market is sustainable moving forward.
FAVOURABLE LABOUR MARKET CONDITIONS KEEP MORTGAGE ARREARS IN CHECK ›
7%
0.60%
6%
0.49%
0.50%
5%
4.5%
0.40%
4%
0.30%
0.25%
3%
0.20%
0.15%
2%
0.10%
0.10%
1%
0.00%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q2 Q3 Q4 Q1 Q1
2014
2015
2016
2017
2018
2019
CANADA ONTARIO ALBERTA BRITISH COLUMBIA BC UNEMPLOYMENT RATE
SOURCE: CANADIAN BANKERS’ ASSOCIATION & LABOUR FORCE SURVEY, STATISTICS CANADA
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