How Bad Is Mortgage Delinquencies In Canada?
On March 5, the Mortgage Bankers Association announced that mortgage delinquencies continued to rise in the US. The press release said “The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 7.88 percent of all loans outstanding as of the end of the fourth quarter of 2008, up 89 basis points from the third quarter of 2008, and up 206 basis points from one year ago”. The percentages of loans that were 60, 90 days or more past due also set new records in 4Q,2008 compared to 3Q,2008.
How does the mortgage delinquency rate in Canada compare to the US rate of 7.88%?
A review of the data from the Canadian Bankers Association shows that the delinquency rate in Canada is much lower than the US rate. Though the data shown in the below table goes only up to October of 2008, it still provides some interesting insight to analyze mortgage delinquencies in Canada.
Number of Residential Mortgages in Arrears
| Month | Total Number of Mortgages | Number of Mortgages in Arrears | % of Arrears to Total Number of Mortgages |
|---|---|---|---|
| 2008-01 | 3,811,089 | 10,100 | 0.27% |
| 2008-02 | 3,809,140 | 10,376 | 0.27% |
| 2008-03 | 3,822,749 | 10,438 | 0.27% |
| 2008-04 | 3,830,155 | 10,068 | 0.26% |
| 2008-05 | 3,842,289 | 10,250 | 0.27% |
| 2008-06 | 3,852,207 | 10,319 | 0.27% |
| 2008-07 | 3,864,025 | 10,420 | 0.27% |
| 2008-08 | 3,871,038 | 10,866 | 0.28% |
| 2008-09 | 3,893,801 | 11,265 | 0.29% |
| 2008-10 | 3,898,269 | 11,459 | 0.29% |
Source: Canadian Bankers Association
Note:Includes data from BMO(BMO), CIBC(CM), HSBC Bank Canada, National Bank of Canada, RBC Royal Bank(RY), Scotiabank(BNS), TD Canada Trust(TD) and Manulife Bank. Mortgage arrears means delinquencies of 3 months or more.
As seen in the above table, mortgage delinquencies in Canada as of October, 2008 stood at just 0.29%. This is much below the 7.88% figure in US reported by the Mortgage Bankers Association. While the Canadian rate increased from 0.27% in the beginning of 2008 to 0.29% in October, it is still below 1% of all outstanding mortgages. Data for the last two months of 2008 is not yet available in the site. As the Canadian economy weakens further it will be interesting to see impact on the mortgage delinquency rate in the coming months.
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