As anticipated, the Bank of Canada opted to hold interest rates steady today, and if all the stars align, their next move could very well be a cut. Despite the reprieve that could bring for Canadian mortgage borrowers, it doesn’t do much to quell the rate pain they’re feeling right now.
New data from Equifax shows that Canadians are missing their monthly mortgage payments in growing numbers, with mortgage delinquency rates up over 52% between the last quarters of 2022 and 2023. As staggering as that figure may seem at first blush, delinquent mortgages represent just 0.14% of all Canadian mortgages, according to Tuesday’s data.
Where things get a bit more grim is in Ontario and British Columbia, where mortgage delinquency rates have soared 135% and 62% over a 12-month course. These figures put cases of mortgage arrears in both provinces above pre-pandemic levels.
“The effect of high interest rates on consumers renewing their mortgages continued to grow in the fourth quarter of 2023,” the multinational consumer credit reporting agency also says, noting that borrowers in Ontario and BC who are up for renewal are seeing their monthly mortgage payments spike more than $680 on average. That’s well above the national average of $457.
Bearing those figures in mind, Vice President of Advanced Analytics at Equifax Canada, Rebecca Oakes, says that upcoming mortgage renewals will be “pivotal” for Canadian homeowners across the board.
"With the prospect of renewing mortgages at substantially higher rates than current ones, consumers who locked in historically low interest rates in 2020 — particularly those with substantial loan amounts — may face challenges in sustaining their payments,” Oakes adds.
The sour cherry on top is that insolvency levels in Ontario and BC have also risen quite sharply, with instances of mortgage holders filing for bankruptcy in those provinces up 76.5% and 46.5%, respectively.
On a brighter note, overall insolvency levels across Canada are still below pre-pandemic levels, according to Equifax’s data.
But it’s not just mortgage debt that’s weighing Canadians down. Equifax also reports that delinquency rates for non-mortgage balances that are 90 days or more overdue have shot up close to 29%.
“Factors such as high cost of living, inflation, credit card payments, and mortgage renewal worries are coming at consumers right now,” says Oakes. “Budgets have been pushed to the limit for some. There's no doubt Canadians are feeling the financial pinch right now.”
