Despite hefting the second-highest average mortgage debt in Canada, only a tiny fraction of British Columbia homeowners are in arrears, according to a study from Canada’s largest mortgage insurer.
Canada Mortgage and Housing Corp. (CMHC) provides mandatory mortgage insurance for buyers with a down payment of 20% or less, considered the buyers the most at risk of default because of their low equity position.
However, CMHC reports that only 0.44% of its B.C. insured mortgages were in arrears in the first half of this year, meaning they are at least 90 days behind in their mortgage payments. This equates to 440 homeowners in trouble for every 100,000 insured mortgages.
The B.C. arrears rate is higher than the national average, which is 0.33%, according to CMHC. As of the first half of this year, 1,618 B.C. homeowners with CMHC mortgage insurance were at least 90 days behind in their mortgage payments.
Nationally, 0.33% of the $551 billion in mortgages insured by CMHC are now in arrears, the agency reports, up from 0.31% in mid-2013.
B.C. homeowners are paying off insured mortgage loans averaging $285,700, the second highest in Canada. Across the country, the average CMHC insured mortgage is $231,500. B.C. buyers taking CMHC insurance this year put down an average of 9% of the purchase price, compared to a national average of 8%.
Alberta, at $321,700, had the highest average insured mortgage in the country, yet its arrears rate of 0.27% is the second lowest among provinces.
Further evidence of the resilience of Canadian homeowners is that, while home buying is increasing, mortgage credit is growing at its lowest level since 2001, TD Bank reports.
“While households are accumulating mortgage credit at a quick pace, they are paying down that debt faster than they have in the past.” TD Economics reports.
TD says lower mortgage lending rates are among the reason for the lower mortgage levels, combined with homeowners “aggressively” paying down mortgage debt and drawing less equity from their homes through lines of credit. TD also suggests that more first-time buyers today are receiving down payment assistance from parents or other family members, which would reduce the overall mortgage amount.
