Insured mortgages at non-bank lenders showing higher arrears rate
Non-bank lenders have seen the rate of arrears on insured mortgages go roughly 50% higher than their uninsured counterparts, according to data from Statistics Canada.
Numbers for Q3 2020, the latest available, indicated that the share of non-bank mortgages under arrears was at 0.24%, representing a 7.35% drop from the quarter prior and a 0.87% uptick on an annual basis.
Insured mortgages from alternative lenders had an arrears rate of 0.31% in the third quarter. For perspective, the insured arrears rate a year prior was just 0.28%, which was 27.55% higher than the rate seen in uninsured mortgages.
As of mid-2020, the insured arrears rate was 0.32%, which was 41.68% above the rate for uninsured products. And that gap has only worsened to 53.78% by Q3 2020, according to real estate information portal Better Dwelling.
“The total arrears rate might have only made a small spike, and came back down, but a lot changed during that period. Insured mortgages saw the rate of arrears rise with the general mortgage market,” Better Dwelling reported. “This was expected as liquidity tightened, and buyers temporarily disappeared. After those liquidity concerns disappeared, the rate fell back to pre-pandemic levels … [with] insured mortgages now defaulting at a higher rate.”
Among chartered banks, the Canadian Bankers Association reported that the mortgage arrears rate fell by one basis point on a monthly and annual basis to reach 0.22% in November. This was the lowest reading since 1990
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