New report on residential mortgages shows a 30-year low in arrears

Gain new insights on mortgage debt growth, uninsured versus insured mortgages, mortgages in arrears and alternative lenders. See the 2021 Residential Mortgage Industry Report and use our Residential Mortgage Industry Data Dashboard to customize your research.

Key highlights:

Market Share: 79%

Banks

Average mortgage
$258,410

Interest rate
1.6% – 5.1%

Delinquency rates
0.20%

Market Share: 14%

Credit Unions and caisses populaires

Average mortgage
$166,410

Interest rate
NA

Delinquency rates
0.13%

Market Share: 5%

Mortgage Finance Companies (MFCs), Insurance and Trust Companies

Average mortgage
$307,470

Interest rate
NA

Delinquency rates
0.25%

Market Share: 2%

Mortgage Investment Entites (MIEs)

Average mortgage
$260,120

Interest rate
6.5% – 15%

Delinquency rates
0.88%

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.

This graph visually represents mortgages in arrears are down for all lender types. Mortgage arrears are the share of mortgage loans for which payment is overdue by 90 or more days.

Mortgage rate trends

The downtrend in fixed mortgage rates — starting early last year — seemed to hit a bottom at the end of the first quarter 2021. This was due to expectations of a strengthening economy. Meanwhile, the Bank of Canada continued to hold the overnight rate at 0.25%.

The large discount between fixed and variable rates drove more borrowers to opt for variable-rate mortgages. Over 40% of new mortgage balances issued in the second quarter of 2021 have variable rates.

New mortgage holders continued opting for longer-term mortgages to take advantage of historically low interest rates.

Mortgage lender type trends

Chartered banks conserved their strong foothold in the overall mortgage debt at 78%. They provided a significant proportion of newly originated loans (73%) in 2020 and (75%) in the first quarter of 2021.

The Big 6 banks provided a larger share of newly extended mortgages in 2020 (68%) than in 2019 (67%).

The remaining 20% of new mortgages in 2020 were handed out by non-bank lenders.

Mortgage investment corporations and other types of mortgage investment entities maintained caution in their lending activity. Their originated mortgages were issued at a slower pace than in 2019, reflecting increasing uncertainty during the pandemic.

Mortgage delinquencies of 90 days or more continued their downward trend for all lender types. Credit unions recorded the lowest rate of mortgages in arrears at 0.13%. Mortgage investment entities continued to record the highest mortgage arrears rates with 0.88%. This was the segment where the arrears rate recorded the largest drop.

Mortgage funding trends

Covered bonds are scaling back in 2021 after escalating rapidly in 2020.

As Canada’s financial market conditions improved, the measures were scaled back resulting in fewer new issuances through 2020 and 2021. Current outstanding covered bonds are still significantly higher than pre-pandemic levels (14%).

Private securitization, such as RMBS and ABCP, continues to remain a very small share of the mortgage funding mix in Canada. It comes in at just 1%. The total amount outstanding in the Canadian private label securitization market was estimated to be approximately $19 billion.

For the complete, illustrated report, download the 2021 Residential Mortgage Industry Report.

Be sure to look at our new companion piece: Residential Mortgage Industry Data Dashboard. This interactive page lets you slice and dice data compiled by OSFI and Statistics Canada.

Download the full 2021 report (PDF)

Related links

• Housing Research newsletter
• Housing Market Outlook
• Housing Market Assessment