Mortgage Delinquencies Could Rise By More Than One Third

As the cost of living continues to rise and homeowners receive no reprieve on the interest rate front, mortgage delinquencies could rise by more than one third over the coming year, says a newThe report, written by Assistant Chief Economist Robert Hogue and Research Analyst Mishael Liu, laid out the increased amount of debt Canadians took on during the pandemic, with household debt-to-income ratio exceeding pre-pandemic levels by late 2021. “It’s remained elevated ever since,” the report reads.

But cracks are already forming around other forms of debt, like installment loans, credit cards, car loans, and lines of credit, with the rate of consumers more than 90 days late on payments seeing a rise. “A looming recession and the ongoing effect of higher interest rates will only add stress in the period ahead,” the report reads.

“Our analysis suggests that mounting unemployment could reverse about half the decline in the rate of mortgage delinquencies over the coming year,” Hogue and Liu explain. “It also suggests the rate is likely to continue trending higher into the medium to longer term as earlier interest rate hikes and heavier debt service loads catch up with financially-stretched mortgage holders.”

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