Mortgage delinquencies could rise by more than a third over current levels during the coming year, as pandemic-related support measures are largely over and living costs continue to soar, a recent RBC report warns.
“What we saw over the last year was a significant increase in interest rates directly impacting mortgage holders with variable rates or fixed rates looking to renew their terms in the coming years,” said Robert Hogue, senior RBC economist and co-author of the report. “There will be a sizable impact on these households.”
Pandemic relief programs such as CERB didn’t stop Canadians from loading on more debt. The real estate boom put mortgage debt on a “fast track” so that by late 2021, Canada’s household debt-to-income ratio had exceeded pre-pandemic levels and it has remained elevated ever since, the report says.“Households have been stress tested, so the majority can handle the increased interest rates,” he said. “Most won’t end in delinquency or insolvency.
The biggest unknown factor in the next year, which could drastically impact delinquencies, is unemployment.
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