Vancouver real estate has fared well since the market slowed, but signs of stress are appearing. Equifax data shows Vancouver mortgage delinquencies climbed in Q1 2024. The delinquency rate remains relatively low, but it made a sharp turn and has already climbed back to pre-pandemic levels. Slow borrowing and sales still persist, meaning this trend will likely worsen before it improves.
Vancouver Mortgage Delinquency Rate Is Back To Pre-2020 Levels
The delinquency rate for residential mortgages in Vancouver CMA.
Source: Equifax; CMHC; Better Dwelling.
Greater Vancouver mortgage borrowers are starting to feel some pressure. The delinquency rate climbed 0.01 points to 0.13% in Q1 2024. It’s now 0.05 points higher than last year, when it plunged to a record low. This isn’t an exceptionally high delinquency rate, but it does present some concerns to look out for in the current context.
Vancouver Mortgage Delinquency Rate Low But Still Concerning
The delinquency rate for Vancouver mortgages is now back to pre-pandemic levels. It’s still 0.02 points below the peak seen shortly after lockdowns and before rate cuts stimulated a boom. However, even if it climbed above that level in the next quarter, the delinquency rate has a long way before returning to the one seen before the non-resident buying boom in 2016.
A few factors worth paying attention to include lending conditions and volume. Regulators and policymakers are now actively encouraging lenders to mitigate delinquencies. Yet delinquencies are rising, even with an active attempt to suppress them. If this is happening while the economy is good, brace yourselves if there’s ever a downturn.
Mortgage volumes are also worth taking note of, especially for those watching inventory. Mortgage borrowing scaled significantly since 2019, and we’re looking at delinquencies as a rate. That means 2019 and 2024 might have the same rate, but the latter requires a lot more delinquencies to get to that level.
Lenders can keep the rate low by issuing new mortgages faster than borrowers fall behind. It’s just an input cost for them when viewed as a rate, and a relatively small one to be honest. However, it still means more homes with delinquent mortgages concentrated in a single market. That can add downward pressure at the margin.
Greater Vancouver mortgage delinquencies are getting worse but aren’t particularly high as of Q1. The region is faring better than a decade ago, and the rate isn’t rising as fast as Toronto—where it recently hit an 8-year high. All good news.
That said, the rate is still climbing while lenders are actively trying to prevent an increase. Slow borrowing and sales also still persist, meaning the odds of this data improving in the next report are fairly slim.
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