As per the Market Pulse Consumer Credit Trends and Insights Report from Equifax® Canada, over 3,000 mortgages in Ontario were found to be in “severe delinquency” in 2024 Q2. The primary reason for rising delinquencies is worryingly high unemployment rate and ever-rising cost of living.
The mortgages amount to a $1.3B. That is a 66.8% surge in delinquencies. The mortgage balance delinquency rate in Ontario has reached its highest level in 10 years at 0.16%. Not in line with Ontario, the national balance delinquency rate remained below pre-pandemic levels.
Shedding light on the impact of rising unemployment on the market, Rebecca Oakes, Vice President of Advanced Analytics at Equifax Canada, stated, “Inflation is stabilizing and interest rates are starting to reduce, which is good news for many consumers. Unfortunately, rising unemployment has offset some of the positives and is driving increased financial stress.”
She further added, “The economic conditions we’re seeing today may be leading many young people to stay at home longer. With fewer job opportunities, soaring rent prices, high housing prices, and the high cost of living, young Canadians are increasingly relying on the support of their parents and grandparents. Homebuyers who secured homes in 2020 and 2021 with low interest rates and high loan amounts, could face challenges. Even with recent rate cuts, these individuals may need to prepare for significant increases in monthly payments and extended amortization terms. Those with low renewal affordability and negative equity may find it especially difficult to navigate these changes.”
