Canada’s banks continue to see borrowers fall behind on their mortgage payments. Canadian Bankers Association (CBA) data shows the arrears rate rose in February, and now sits at double the pandemic lows. The volume of delinquencies has now reached its highest level in more than a decade.
Canadian Delinquency Rate Reaches Double 2022 Lows
Mortgage arrears rate (90+ days past due) at CBA member banks.
Source: CBA; Better Dwelling.
The mortgage arrears rate at Canadian banks climbed one basis point (bp) to 0.28% in February, up 5 bps from last year. It may not sound like much, but this means delinquencies outpaced net new loans by 3.7% in the month, and 21.7% since last year. The rate is now double the record lows of 2022, and the highest level since February 2017.
Canadian Banks See Most Delinquencies Since 2014
Canadian mortgages in arrears at CBA member banks (90+ days past due).
Source: CBA; Better Dwelling.
The arrears rate surge isn’t just due to fewer new loans; more people are falling behind. The number of loans at least 90 days past due (DPD) climbed 2.3% to 13,749 in February, up 22.1% from last year. That’s up a staggering 89% from the August 2022 record low, and the most delinquencies since March 2014. That was back when the Bank of Canada’s then-Deputy Governor Tiff Macklem warned of a bubble.
Hilarious, eh? We know.
While the arrears rate sits where it was 9 years ago, it’s very different this time—not just because it was falling then and is climbing higher today. The composition and mechanics of Canada’s mortgage markets have since changed. Today, banks hold a smaller share of the mortgage market, helping to create a market for loans. It’s now much more common for lenders to deny renewals to “bad” borrowers or sell risky loans to minimize risk. This strategy reduces the optics of risk while pushing these loans off the CBA arrears rate.
To be blunt, more mortgage borrowers are finding out they aren’t richer than they think.
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