CMHC Mortgage and Consumer Credit Trends
The COVID-19 pandemic has had significant social and economic impacts in 2020 throughout Canada. We have observed unprecedented declines in employment, and increased financial stress for households. The pandemic poses a major risk to housing and financial markets.
CMHC’s latest release of Mortgage and Consumer Credit Trends data tables cover the fourth quarter of 2020. Here are some key highlights from the data:
Delinquency rates edged lower across all credit types
Mortgage delinquency rates in Canada edged lower to 0.25%. This is the lowest level in the five years that CMHC has reported mortgage delinquency rates.
Delinquency rates trended lower across all non-mortgage credit types compared to Q4 2019 to:
• 1.18% for credit cards (down by 44 basis points)
• 1.70% for car loans (down by 29 basis points)
• 0.55% for lines of credit (down by 9 basis points)
• 0.15% for home equity lines of credit (down by 2 basis points)
Mortgage delinquency rates trended lower across all age cohorts:
• The 25 to 34 year olds, who are typically first-time homebuyers, saw their rate decline to 0.20%, the lowest level of any cohort. This age group accounts for 15% of all mortgage holders.
• Seniors aged 65 and over, who account for 12% of all mortgage holders, registered the highest delinquency rate of 0.33%.
Delinquency rates declined across all mortgage loan amounts. The highest delinquency rate, at 0.32%, remained for mortgages with the lowest value at origination that is less than $200,000.
Borrower credit scores trended higher
The share of outstanding and newly originated mortgages held by consumers with a high credit score (700 and above) continued to edge higher. For the outstanding mortgage loans, this share reached 87.71% which is the highest level in the last five years it has been reported by CMHC. For the newly originated mortgage loans this share edged up to 86.06%.
The average credit score increased to:
• 765 for mortgage holders
• 753 for non-mortgage holders
The average Bankruptcy Navigator Index is a ‘’predictive’’ score that estimates the likelihood of a consumer to become insolvent in the next 24 months. Higher scores indicate a lower risk. The score for both mortgage holders (938) and non-mortgage holders (923) reached the highest level over the past five years. This suggests a lower probability of bankruptcies.
Mortgages accounted for a larger share of consumer debt
Newly originated mortgages as a share of all mortgage loans edged up to 4.94% from 4.39% the year prior. New mortgage loans accounted for 6.93% of outstanding mortgage dollar balance compared to 5.73% in Q4 2019.
Interested in more housing & credit data tables? Visit www.cmhc-schl.gc.ca
