Ontarian's are facing extreme financial pressure as more mortgages come up for renewal at higher interest rates, coupled with rising unemployment, according to a new report by Equifax.
The report reveals that in Ontario, the total mortgage balance reaching “severe delinquency” — defined as 90 days or more without payment — surpassed $1 billion for the first time in the first quarter of 2024. This figure is double the level recorded before the pandemic.
Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada, described the situation as "shocking." She noted, "It’s not a case of it’s increasing or flattening — it’s still on an upward trajectory in terms of missed payments. That really is where the concern is coming from."
Mortgage delinquency rates have surged in both Toronto and Vancouver, the cities with the highest housing demand in the country. Delinquencies for mortgages over 90 days past due rose in Toronto to 0.14 percent in Q1 2024 from 0.09 percent in Q1 2020, and in Vancouver, the number increased to 0.14 percent from 0.11 percent during the same period.
Equifax estimated that about 34,000 consumers missed a payment on their mortgage in the quarter, marking a roughly 23 percent increase from a year ago.
Nationally, while mortgage delinquency rates remained lower than pre-pandemic levels, provinces like Alberta, Saskatchewan, and Manitoba recorded some of the highest non-mortgage debt and delinquency rates in the quarter.
Overall, Canadians are accumulating more debt across all categories. Consumer debt rose to $2.46 trillion, a 3.5 percent increase from the previous year. However, many are struggling to pay it off, with over 1.26 million consumers — about three percent of all Canadians — missing at least one credit payment, the highest number since 2020.
According to Equifax, auto loans and lines of credit are facing the highest risk of missed payments. Oakes explained that when consumers experience a credit crunch, the last product to see delinquencies is typically mortgages.
“We are really seeing consumers trying to adapt to the situation more than we have done in the past,” Oakes said.
Equifax found that consumers are now checking their credit scores more frequently, shopping around for better rates, switching from the Big Five banks to other lenders, and, in Ontario, considering moving to provinces with a lower cost of living.
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