Summer 2021 Residential Mortgage Industry Dashboard

We explore the composition of new mortgage activity, mortgage investment corporation segment and trends in mortgage arrears. Find all the details in our summer 2021 Residential Mortgage Industry Dashboard.

Uninsured mortgages make up the core of new mortgage activity

After three quarters of strong growth, the value of outstanding residential mortgages issued by chartered banks continued to grow. Growth for the first quarter of 2021 was a slightly lower. Overall, chartered banks added $100.3 billion worth of residential mortgages to their portfolios.

New mortgage flows increased for all types of transactions compared to the same quarter in the previous year (figure 1). The escalation in uninsured mortgages contributed to over 90% of gross increases in mortgage loans.

Compared to the same period a year previous, chartered banks recorded an increase of:

• 77.6% in new uninsured mortgages originated for property purchases
• 49.2% in same-lender refinancing
• 35.6% in same-lender renewals
• 43.8% in switches

Insured mortgages also grew slightly, mostly driven by individually insured mortgage loans (figure 2).

Uninsured mortgages issued by chartered banks surged in the first quarter of 2021, contributed most to gross increases in mortgage loan

Chartered banks received $59 billion in repayments in the first quarter, 48.5% higher than at the same time the previous year. Despite a slight drop compared to the previous quarter (fourth quarter of 2020), unscheduled repayments were still much higher than the same quarter in previous years (figure 3). This shows that mortgage holders are accelerating their repayment, by making payments ahead of schedule or by making lump-sum payments.

Cash flows from end-of-contract principal repayments have also seen a substantial boost. This is the result of increased switches from one financial institution to another. It’s also due to the rise in repeat buyers, borrowers paying off one loan when selling their property to get a new one as they purchase a new one.

Mortgage investment corporation segment continues to grow, but at a slower pace

Growth in lending by mortgage investment corporations picked up in the fourth quarter of 2020, after slow second and third quarters (table 1). As of the end of 2020, the total assets under management was 6.2% higher than the previous year. The growth in this segment is slower than the overall growth in the regulated residential mortgage market (9.5%).

Table 1: Mortgage investment corporation lending growth slowed down in 2020

Source: Fundamentals Research Corporation, Statistics Canada, CMHC calculations

Mortgage arrears continue to drop across all lender types

In the fourth quarter of 2020, residential mortgage arrears (implying a non-payment for 90 days or more) continued their downward trend. They reached a peak in the second quarter of 2020. This decrease is noticeable across all lender types:

• credit unions recorded the lowest rate of mortgages in arrears, at 0.14%
• mortgage investment entities recorded the most significant drop (22 percentage points)

This drop in mortgage investment entities lender type brought their arrears rate down to 1.57% (see figure 4).

The majority of mortgage deferral agreements expired at the end of the third quarter of 2020. As a result, a large share of mortgage consumers were able to resume their payments. They were also able to make them on time.¹

In addition, non-scheduled payments, which include lump-sum payments or accelerated repayments, continued to increase significantly. This suggests that the risk of a deferral cliff, which was feared during the early stages of the pandemic, has not materialized.

2.5% of the residential mortgage portfolio of the following lender types was still in deferral at the end of 2020:

• credit unions
• mortgage finance companies
• trusts
• insurance companies

Only 1% of the mortgage portfolio of mortgage investment entities was still in deferral,compared to 7% during the second quarter of 2020. On average, mortgage investment entities granted mortgage deferrals for a 3-month period, compared to 6 months for the majority of other lenders.

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