canadian delinquencies on the rise

Latest in Mortgage News: Mortgage Delinquencies on the Rise

The debt burden carried by Canadian consumers continued to rise this year, causing more people to fall behind on their debt payments…including their mortgages.

The 90-day-plus delinquency rate for mortgages rose to 0.18% in the third quarter. That’s a 6.7% increase compared to a year earlier, according to data from Equifax.

Non-mortgage debt delinquencies were up 9.7% in Q3 to 1.15%. That’s the highest third-quarter reading since 2012.

“While the uptrend in delinquencies has been relatively modest, it has been masked by a significant increase in consumer bankruptcies,” said Bill Johnston, Vice President of Data and Analytics at Equifax Canada. “Consumer proposals, where a licensed insolvency trustee negotiates debt repayments, remain on a strong rising trend and that is coming at the expense of traditional delinquencies.”

The Equifax data shows the average consumer now carries about $72,500 in debt, up 2.1% compared to a year earlier. Non-mortgage debt rose just 1.5% to $23,800, which marks a “significant slowing from recent trends,” Equifax noted.

In total, Canadians now owe $1.966 trillion in consumer credit, a rise of 4.1% from the same time last year.

HomeEquity Bank Sells Reverse Mortgage Portfolio

WealthOneHomeEquity Bank announced Wednesday it has sold $75 million worth of reverse mortgage loans to a third party. This is the first time a reverse mortgage portfolio has been sold as a financial product in Canada.

“This transformative deal paves the way for creating a new market for originating and selling reverse mortgages in Canada, similar to opportunities available to U.S. and U.K. investors,” HomeEquity Bank EVP and Chief Financial Officer Atul Chandra said in a release. “It creates a new source of liquidity to support our continuing growth, in addition to further enhancing the profitability of our business.”

The Globe and Mail reported that the buyer was Saskatoon-based Concentra Bank, a provider of wholesale banking and trust company services to credit unions.

HomeEquity Bank is the leading provider of reverse mortgages in Canada with its CHIP Reverse Mortgage product. It currently has $3.3 billion in reverse mortgages on its balance sheets, and expects to add another $900 million in the coming year. According to comments made in the Globe article, HomeEquity Bank CEO Steven Ranson said they would like to sell upwards of 10 to 20% of that portfolio.

B.C. Speculation Tax Will Rise to 2%

vancouver house pricesBritish Columbia’s Speculation and Vacancy Tax on land owned by foreigners will jump to 2% on December 31, 2019, up from its current 0.5% rate.

The B.C. government announced it will introduce several new exemptions, while others will be phased out.

It was reported earlier this summer that the tax had raised $115 million that was reinvested to create more affordable housing. Figures show 12,029 B.C. property owners have been affected by the tax. Of those, 4,585 are foreign owners, around 1,500 are Canadians living outside of B.C. and 2,410 are B.C. residents.

Home Prices Post 9.2% Increase

rising canadian home pricesCanadian home prices rose 9.2% year-over-year in November, according to the latest Teranet-National Bank Composite House Price Index.

The increase is similar to the 8.4% increase reported days ago by the Canadian Real Estate Association.

This marks the fourth straight quarter of home price appreciation by the Teranet-National Bank House Price Index, which tracks sales of single-family homes.

“The composite index has been strengthening for seven months after weakness in the previous eight, a path reflected in a cumulative gain of only 1.4% over the 12 months ending in November. That, however, amounts to a fourth consecutive acceleration,” the report noted.

Leading the gains were Windsor, Ont. (+9.37%), London, Ont. (+9.37%) and Brantford, Ont. (+8.20%). Leading the declines in home prices were Vancouver (-5.19%), Edmonton (-2.67%) and Abbotsford (-1.72%).

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