The Current State of Mortgage Debt Growth

According to the Canada Mortgage and Housing Corporation (CMHC) industry report, there are historically low-interest rates alongside strong housing market activity amid the pandemic. This is being driven by the demand for more space. The low-interest rates also influenced the growth of residential mortgage debt in the first half of 2021. 

CMHC senior specialist of housing research Tania Bourassa-Ochoa explained that there is also a 30-year low in terms of mortgages in arrears. “Many borrowers benefitted from a mortgage deferral program offered by CMHC and lending institutions and were able to resume regular payments,” Bourassa-Ochoa said. “As well, more consumer savings and the growth in disposable income have contributed to the ability of Canadians to make the payments on time.”

What are the report highlights?

In the first quarter of 2021, the growth of scheduled principal payments was a result of the build of a share of disposable income. This was also reflected by larger mortgages via 2020’s increased housing prices. Another mortgage lending trend pertained to a 20% growth in volume for uninsured new mortgage credit. 

As for the state of mortgage rates, new mortgage holders continued to accept ones for longer terms. This was done to benefit from the historically low rates of interest. Additionally, more borrowers opted for variable-rate mortgages. According to the report, in the second quarter of 2021, over 40% of new mortgage balances pertained to variable rates. 

Trends in terms of mortgage lender type were also highlighted in the report. In terms of the insured mortgage space, credit unions held 20% of the space. Meanwhile, the Mortgage finance companies (MFCs) held 20% of it. 

More trends and findings can be found within the CMHC’s residential mortgage industry report. This document is a yearly look into the Canadian residential mortgage industry. Through an online dashboard, interested individuals may also look over and interact with data that serve as a companion to the report.