Mortgage defaults plunge in Toronto, Vancouver

August 7, 2018

The federal mortgage stress test was meant to protect mortgage holders from getting overextended, but the latest mortgage data shows that mortgage defaults have fallen to record lows, even in Canada’s most expensive housing markets. The findings come from Canada Mortgage and Housing Corp. (CMHC) Mortgage and Consumer Credit Trends report, released August 1.
In Toronto, only 0.09 per cent of outstanding mortgages in Toronto were delinquent in the first quarter of 2018, down from 0.11 per cent in the same period last year
Hamilton, one of Ontario’s hottest markets over the past year, also had a mortgage delinquency rate of 0.09 per cent in this quarter, below the Ontario average in early 2018.
A mortgage is considered delinquent if payments are lapsed by at least 90 days, or three months of payments. Across southern Ontario, mortgage defaults are at the lowest level in at least four years.
The report also notes that mortgage defaults were lower as the mortgage amount increased. In Toronto, for example, the lowest delinquency rate, 0.08 per cent, was among those homeowners will mortgages in excess of $400,000.
Equifax credit scores also moved higher in both Toronto and Hamilton, averaging 775 in Toronto and 772 in Hamilton.
“Higher credit scores are indicative of households able to make payments in a timely fashion,” CMHC noted.
In Vancouver, which has the highest housing prices and mortgages in the country, the mortgage delinquency rate has been tracking down since 2014 and was at 0.10 per cent in the first quarter of 2018. Average credit scores for Vancouver mortgage holders increased to 780, among the highest in the country. CMHC found that the average monthly mortgage payment in Vancouver in the first quarter was $1,794 per month, up from $1684 a year earlier.
Across Canada, the mortgage delinquency rate had fallen to 0.29 per cent in the fourth quarter of 2017, down from 0.34 per cent a year earlier, according to the latest national data from CMHC.