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Sources: Canadian Bankers Association, CMHC residential mortgage data reporting of NHA MBS issuers, Fundamentals Research and CMHC calculations based on the Survey of Non-Bank Mortgage Lenders.
Mortgage lending trends
In the first half of 2021, mortgage debt growth ticked up to levels not seen in a decade. Record-low interest rates and shifting housing needs played a large role in the acceleration of mortgage activity.
As a share of disposable income, Canadian mortgage debt service burden continued to build up in the first quarter of 2021. It was driven by growth in scheduled principal payments. This was in part from larger mortgages resulting from the rapidly increasing housing prices in 2020.
Uninsured new mortgage credit saw a 20% growth in volume, taking over an increasing share of the residential mortgage market. The most noteworthy increase was in the issuance of uninsured mortgages for purchases of property. These more than doubled the amount originated in the same quarter in 2020.
The economy progressively opened up. Deferral agreements expired.
The vast majority of borrowers that benefitted from deferral arrangements had resumed their payments as scheduled. At the end of the first quarter of 2021, close to 30,000 mortgage loans (2%) held by non-bank lenders were still in deferral.
The total value of the deferrals was $6.9 billion.
Mortgages in arrears reached a 30-year low.
Most borrowers who benefitted from a mortgage deferral were able to resume regular payments. Enhanced consumer savings and the growth in disposable income have contributed to the ability of Canadians to make the mortgage monthly payments on time. Figure 1 shows mortgages in arrears from the first quarter of 2020 to the first quarter of 2021 by lender types.