New Publication: Residential Mortgage Industry Report

In our continued effort to fill housing market data gaps, we’ve just released the first Residential Mortgage Industry Report. This new report gives insight into the mortgage industry and recent mortgage market trends. It covers everything from mortgage origination to funding, insured and uninsured mortgages, and activity from all mortgage lender types.

Every year, we’ll release a new edition of the Report in the first quarter, with updates in each following quarter.

Some highlights from the first Report:

Mortgage lending trends

The decrease in mortgage originations in 2018 resulted in the slowest growth rate of outstanding mortgages in over 25 years.
The reasons for this decline include tighter underwriting criteria and non-underwriting criteria, higher borrowing costs and modest economic conditions. Together, these factors, among others, resulted in softer housing demand in some major centres in Canada.
New mortgages for the purchase of property decreased by 19% in 2018. Refinanced mortgages by the same lender, meanwhile, decreased by 12%.

Mortgage insurance trends

The share of mortgages that are uninsured has been increasing. The increase is a result of adjustments to regulatory changes, of changes in economic conditions and of changes to portfolio insurance.
In 2018, insured mortgage originations accounted for less than 1 in 3 new mortgage loans. Result: the share of outstanding mortgages that are insured decreased from 57% in the first quarter of 2015 to 41% in the first quarter of 2019.

Mortgage lender type trends

In 2018, federally regulated financial institutions held an estimated 78% of all mortgage debt. Provincially regulated financial institutions, such as credit unions, held about 14%.
The remainder was held by quasi-regulated lenders, such as mortgage finance companies (about 6%), and unregulated lenders, such as mortgage investment corporations (about 1%).

Mortgage rate trends

Most Canadian mortgage consumers choose fixed-rate mortgages with 5-year terms.
Still, variable-rate mortgages have been gaining popularity. In the first quarter of 2019, the average share of new mortgages with a variable rate was 29%. This represents a 12-percentage-point increase compared to the same period in 2017.

Mortgage funding trends

Deposits are the main source of mortgage funding for chartered banks and credit unions.
Private securitization still accounts for a very small share of funding sources in Canada, hovering between 0,5 % and 1.5%.
Covered bonds, meanwhile, have increased their share of the funding market. At the last quarter of 2018, this share had grown by close to 1 percentage point from a year earlier, reaching 9.5%.