credit and debt
MORTGAGE DEFAULTS IN THE ARREARS-VIEW MIRROR
The last thing a household will default on is its mortgage. While not ideal, consumers can make do without credit cards, lines of credit, and even cars (particularly with the advent of ride-sharing services)—but not so much their home. Most people would exhaust all of their options in order to protect what is both their largest financial commitment and the literal roof over their head. Even so, British Columbia’s historically low mortgage arrears rate gets far less attention than perhaps it should, because whatever the order that one assigns to defaulting on his or her debt obligations, the reality is that British Columbians are very good at paying down their mortgages in a timely manner. At 0.14%, BC’s current arrears rate sits behind only Ontario’s (an unfathomably low
0.09%) and is roughly 40% lower than the national average. It’s also 10% lower than it was one year ago, and 69% lower than it was five years ago. Not surprisingly, BC’s arrears rate moves in step with its unemployment rate; when people are working and earning incomes, they make their housing payments. This may be why the province’s historically low arrears rate has been accompanied by a near- historically-low unemployment rate. This relationship won’t change anytime soon with BC’s labour market likely to remain tight in the coming years. Don’t expect the arrears rate to deviate much from where it sits today.
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HAVE JOB, CAN PAY MORTGAGE ›
8%
0.60%
7%
0.50%
0.46%
6%
0.40%
5%
4.5%
4%
0.30%
0.24%
3%
0.20%
0.09% 0.14%
2%
0.10%
1%
0%
0.00%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2013
CANADA
ONTARIO
ALBERTA
BRITISH COLUMBIA
BC UNEMPLOYMENT RATE
SOURCE: CANADIAN BANKERS ASSOCIATION & LABOUR FORCE SURVEY, STATISTICS CANADA
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