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Posthaste: Mortgage delinquency rates in Ontario and B.C. soar as higher payments bite Back to video

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More Canadians are beginning to crack under the pressure of increased mortgage payments, new data on consumer credit showed today.

Mortgage delinquency rates were up more than 50 per cent at the end of last year from the year before, with two provinces leading the way, says the Equifax Canada credit trends report for the fourth quarter.

In Ontario and British Columbia, the country’s most expensive housing markets, delinquency rates soared by 135.2 per cent and 62 per cent, respectively, rising above pre-pandemic levels.

An especially “worrying trend” is a sharp increase in mortgage borrowers filing for bankruptcy, the report says. Canada-wide, such filings are up 23 per cent, but in Ontario and British Columbia, bankruptcy filings spiked by 76.5 per cent and 46.5 per cent, respectively.

“With the prospect of renewing mortgages at substantially higher rates than current ones, consumers who locked in historically low interest rates in 2020 — particularly those with substantial loan amounts — may face challenges in sustaining their payments,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada.

Equifax says anyone who renewed their mortgage in the fourth quarter of 2023 saw their payments increase on average by $457, with hikes of $680 and more in Ontario and British Columbia.

“There were also growing signs of deteriorating credit performance for mortgage holders in the last quarter of 2023, especially for those facing a monthly payment increase of more than $500,” said the report.

Mortgagors in Ontario and British Columbia are increasingly missing payments on their credit cards, especially younger homeowners, said Equifax.

Non-mortgage debt is also climbing, up 4.1 per cent in the fourth quarter, mostly driven by credit cards.

But that doesn’t mean Canadians are spending more — quite the opposite.

“Credit card balances that were being driven by a rise in consumer spending are now being driven by reduced payment levels instead,” said Oakes.

Fewer Canadians are paying off their credit card bills in full, a trend that is especially noticeable among those with balances over $50,000 on variable-rate home equity lines of credit (HELOC), the report said. The average payment per dollar spent also declined.

“The high cost of living continues to have an impact across all consumer segments, and is leading to a worrying increase in non-mortgage delinquency rates,” said the report.

Over 153,000 more consumers missed payments on credit products, which is above pre-pandemic levels. Auto loans and unsecured lines of credit are also showing rising arrears levels, the report said.

“Factors such as high cost of living, inflation, credit card payments, and mortgage renewal worries are coming at consumers right now,” said Oakes.

“Budgets have been pushed to the limit for some. There’s no doubt Canadians are feeling the financial pinch right now.”

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Here’s a grim statistics from Capital Economics — 2023 was one of the weakest years for global trade in more than 70 years. Trade contracted 1.9 per cent, making the year the fifth weakest for world trade since 1950.

Capital economists expect trade weakness to continue in the first half of this year and then modestly recover in the second half as interest rates begin to come down.

“However, given the potential lurch to protectionism in the U.S. after the upcoming presidential election, the risks to our 2025 forecast are skewed to the downside,” said economists.

• Ontario’ minister of mines speaks at the Prospectors & Developers Association of Canada (PDAC) 2024 Convention in Toronto.
• The RBC Global Financial Institutions Conference begins in Toronto
• The parliamentary budget officer will post a report entitled “Economic and Fiscal Outlook”
• Cenovus Energy Inc. holds its investor day in Toronto
• Today’s Data: Toronto home sales, United States factory and durable goods orders
• Earnings: Canfor Corp., Franco-Nevada Corp., Pet Valu Holdings Ltd, Nuvei Corp, Target Corp

• Spring housing market resurgence could give Bank of Canada pause on rate cuts
• Toronto home prices inch up as buyers adapt to mortgage rate landscape
• Personal tax credits sound great, but they have a cost that quickly adds up

Canada has several industries dominated by just a few companies, namely banks, telecoms and grocers, which means consumers have limited choices and pay more for certain things as a result. But portfolio manager Robert Gill says these oligopolistic industries can be good for investors since the companies involved face less competition and have plenty of pricing power. Find out more at FP Investing

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at aholloway@postmedia.com with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

McLister on Mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. mortgage payments

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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