While household debt continues to be a key concern in Canada, the mortgage market has remained stable. Notably, we find that the mortgage delinquency rate1 and the share of mortgages granted to riskier2 borrowers both remained low and stable in 2016. However, the average Canadian mortgage scheduled payment growth rate has accelerated and now is firmly above the rate of inflation. There are some initial signs that the mortgage market is slowing with a flattening of the share of consumers with a mortgage and below average growth in the average value of new mortgages in 2016 Q4.
Oil dependant regions, notably Calgary and Edmonton, continue to struggle with delinquency rates trending up. In contrast, Vancouver and Toronto continue to record some of the lowest delinquency rates in Canada despite high prices.
1 This report uses data from the credit rating agency Equifax, covering approximately 85% of the mortgage market. All figures are CMHC calculations on data sourced from Equifax, unless otherwise stated.
2 A consumer’s risk is based on the Equifax Risk Score (ERS). The higher the value the least likely that a borrower will become seriously delinquent (late 90 days or more) within 24 months on a debt product. ERS ranges often used are the following:
- Poor (less than 599);
- Fair (600 – 659);
- Good (660 – 719);
- Very Good (720 – 779);
- Excellent (more than 780)
000 scores are given to consumers for which there isn't sufficient information in the credit report to calculate a score. Usually, a credit history in Canada of 3 to 6 months is needed to begin to generate scores.
Those borrowers with scores below 660 are at the most risk of becoming seriously delinquent.