Those most likely to miss a mortgage payment are in the 65+ age group, according to a new report by the Canada Mortgage and Housing Corporation.
Since late 2015, the mortgage delinquency rate among 65+ mortgage holders has been on the rise and the highest among all age groups, says the Mortgage and Consumer Credit Trends report by CMHC. Other than this bit of news though, it looks like Canadians are in good shape regarding indebtedness.
In the fourth quarter of 2018, the level of indebtedness increased faster than income, bringing the debt-to-income ratio to 178.5%. Mortgage loans equalled nearly two-thirds of Canadian debt, with the remaining being in home equity lines of credit (10.8%), credit cards (5.3%), car loans (4.1%), and personal lines of credit (3.1%).
“While indebtedness of Canadian households remains elevated, growth in the volume of mortgage activity slowed in the last quarter of 2018, partly reflecting lower housing market activity,” says Geneviève Lapointe, Senior Market Analyst Economics. “Despite high debt levels, delinquency rates remain low and the number of highly indebted and more vulnerable consumers has decreased.”
Mortgage loans kept growing last year, but at a slower pace than in 2017, mostly due to slower housing activity in general. CMHC says that tighter policies, higher prices, and higher interest rates likely impacted the quality and quantity of mortgage holders. Mortgage holders with low credit scores (below 600) continued to trend down, equalling less than 1% of new mortgage loans.
The average mortgage loan value in the fourth quarter of 2018 was $209,570, which is a 3.1% year-over-year increase. Those with a mortgage continued to increase debt outside of the mortgage, mostly with credit cards and lines of credit. Outstanding balances of HELOCs and car loans slowed though. CMHC recorded similar activity among Canadians without a mortgage.
Vancouver, Edmonton and Toronto saw a greater increase in outstanding balance of non-mortgage debt among mortgage holders. Those without a mortgage in Edmonton and Toronto had similar increases in debt, suggesting Canadians in these two areas are more financially strained compared to other regions of the country.
Among mortgage holders, utilizations rates of sources of credit increased mostly with personal lines of credit (62.6%), followed by HELOC’s (57.9%) and credit cards (38.7%). Though Toronto mortgage holders carry some of the highest mortgage debt in the country, its delinquency rate is stable and below the national average.