{"id":222845,"date":"2025-05-04T12:55:35","date_gmt":"2025-05-04T12:55:35","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/real-estate\/are-mortgage-delinquincies-on-the-rise-in-canada\/"},"modified":"2025-05-04T12:55:35","modified_gmt":"2025-05-04T12:55:35","slug":"are-mortgage-delinquincies-on-the-rise-in-canada","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=222845","title":{"rendered":"Are Mortgage Delinquincies On The Rise In Canada?"},"content":{"rendered":"


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Sometimes I have absolutely nothing to write about on TRB.\u00a0 I still find a way, but there are times when my queue is simply empty.<\/p>\n

Then other times, I have so much to say that my queue contains topics that need to be explored for fear of them growing stale!<\/p>\n

In fact, most two-part blog stories start with the intention being\u00a0one<\/em>, but after you hit a certain length, that alarm bell goes off that says, \u201cHey, this feels like a \u2018Part II\u2019 is going to be needed.\u201d<\/p>\n

Then there are the times where we explore an important topic and merely\u00a0touch<\/em> on a secondary or related topic therein, but where that second topic necessitates a blog post of its own.<\/p>\n

Last Thursday\u2019s blog was exactly that.<\/p>\n

On Thursday, we looked at the \u201cMortgage Renewal Cliff\u201d and traced back the origin of the term, exactly\u00a0why<\/em> it came to exist, and got up to speed on whether or not it\u2019s still relevant in March of 2025.<\/p>\n

But at the very end of the post, I mentioned\u00a0mortgage delinquencies<\/em>.<\/p>\n

This was an afterthought as far as the blog was concerned, but when I ran into a client on the weekend, she said, \u201cI read your blog on Thursday; you\u2019ve never talked about mortgage delinquencies before, it was cool.\u00a0 But what is<\/em> a delinquency?\u201d<\/p>\n

Good question.<\/p>\n

Up until now, we\u2019ve merely assumed that everybody knows!<\/p>\n

My client continued to ask, \u201cIs a delinquency the same thing as a default?\u00a0 And what\u2019s it called when the bank actually takes your house and sells it?\u201d<\/p>\n

All good questions, but then came the kicker:<\/p>\n

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\u201cAt what point does a delinquincy rate signal a problem<\/em>?\u201d<\/p>\n<\/blockquote>\n

I touched on this during Thursday\u2019s blog, but I think that every reader, economist, lender, and banker are going to have their own answer to this question.<\/p>\n

This is also where my favourite saying comes into play:\u00a0you can make numbers say anything you want<\/em>.<\/p>\n

We\u2019ve played this game\u00a0many<\/em> times before on TRB, but let me ask a hypothetical question:<\/p>\n

If you heard that a local baseball team increased their attendance by 1000%, how would you describe that figure?<\/p>\n

Would you describe this as \u201ca lot\u201d?<\/p>\n

Relatively, yes.\u00a0 But relative to what?<\/p>\n

Alright, here\u2019s what I\u2019m really asking: if you heard that a local baseball team increased their attendance by 1000%, would you simply assume this means many people attend the games?<\/p>\n

Because if the team was averaging\u00a0one<\/em> fan per game, and another\u00a0ten<\/em> joined on average thereafter, then there\u2019s your 1000% increase.<\/p>\n

In the end, eleven fans isn\u2019t a lot.<\/p>\n

I talk quite a bit about\u00a0relative<\/em> versus\u00a0absolute<\/em> when I analyze statistics here on TRB, and when it comes to mortgage delinquencies, I\u2019ve felt this really hits home.<\/p>\n

First, a couple of definitions.<\/p>\n

A \u201cdelinquent\u201d mortgage is one where the borrowers are more than three months, or ninety days, overdue for payment.\u00a0 This is referred to as \u201ca mortgage delinquency\u201d as well as \u201cmortgage in arrears.\u201d<\/p>\n

You\u2019ll hear these terms used interchangeably but \u201cdelinquent\u201d is the same as \u201cin arrears.\u201d<\/p>\n

Now what is a mortgage \u201cin default?\u201d<\/p>\n

That\u2019s trickier, especially because the media will often use the terms interchangeably.<\/p>\n

Here\u2019s an example:<\/p>\n

\"\"<\/p>\n

The headline says \u201cdefaults\u201d but the article uses the word \u201cdelinquent.\u201d<\/p>\n

Again, you can ask ten people in the mortgage<\/a> industry to differentiate between the terms, and you\u2019ll get ten slightly different answers.<\/p>\n

Simply put, \u201cdelinquent\u201d means\u00a0overdue<\/em>.\u00a0 To be in \u201cdefault\u201d means to break the loan covenant, but we all know that missing a payment is\u00a0exactly\u00a0<\/em>that.\u00a0 So to be \u201cdelinquent\u201d essentially means to be in \u201cdefault,\u201d but it\u2019s widely understood that to be in default means to continuously miss payments to the point where the lender is, or has taken action to recover the money owed, including foreclosure.<\/p>\n

The verbiage will differ depending on the geography, and just as Americans will refer to a deposit \u201cin escrow\u201d and we say the funds are \u201cin trust,\u201d we see these terms and their definitions vary consistently.<\/p>\n

In Canada, we use the term \u201cmortgage delinquincy\u201d and we define this as a mortgage where payments are overdue by 90 days.<\/p>\n

Defaults, foreclosures, power of sales, bank sales \u2013 this is a whole other conversation.\u00a0 Not every delinquent borrower has their house foreclosed on by the lender and sold against their will.<\/p>\n

Now, back to this idea that \u201cyou can make numbers say anything you want.\u201d<\/p>\n

Let\u2019s look at some of the recent headlines about mortgage delinquincies.<\/p>\n

Here\u2019s a banger:<\/p>\n

\u201cOntario\u2019s Mortgage Delinquincy Rate Nearly Doubled In The Final Months Of 2024\u201d<\/a>
CTV News
February 25th, 2025<\/p>\n

Hard to ignore the word \u201cdouble,\u201d right?<\/p>\n

And there\u2019s no fudging the numbers here.\u00a0 This is a 90.2% increase from Q4 of 2023 to Q4 of 2024.<\/p>\n

But we\u2019ll come back to this.<\/p>\n

Three days later, we see this article in our news feeds:<\/p>\n

\"\"<\/p>\n

But when we click on the link, it takes us to\u00a0this<\/em> article:<\/p>\n

\u201cOntario Mortgage Delinquincy Rate Jumps 50% Amid Growing Signs Of High-Rate Renewal Shock\u201d<\/a>
Toronto Star
February 28th, 2025<\/p>\n

The first link said, \u201csince 2019.\u201d<\/p>\n

But maybe that\u2019s not sexy enough?<\/p>\n

The second headline simply says \u201cjumps 50%\u201d and then adds \u201cshock.\u201d<\/p>\n

Newspapers re-write headlines all the time, just as they update articles that have already been released.\u00a0 This felt like a case of trying to make the situation sound a lot more dire!<\/p>\n

Not only that, the sub-headline reads:<\/p>\n

\u201cCredit agency Equifax reports more than 11,000 mortgages in the province missing at least a payment in the fourth quarter of 2024, nearly three times the number seen in 2022.\u201d<\/p>\n

So now we\u2019re talking about missing\u00a0one<\/em> payment instead of being delinquent, which is missing\u00a0three\u00a0<\/em>payments, and we\u2019re also \u201cthree times,\u201d or 300%, over 2022.<\/p>\n

Got it.<\/p>\n

So through two articles with three headlines, we\u2019re looking at mortgage delinquencies:<\/p>\n

-in Ontario
-in Canada
-year-over-year
-since 2019
-since 2022
-in Q4
-one month in arrears
-three months in arrears<\/p>\n

Did I miss anything?<\/p>\n

There are so many ways to make an argument when you\u2019re armed with\u00a0data<\/em>.<\/p>\n

\u2026<\/p>\n

Right, because this is in\u00a0Ontario<\/em>, but the first headline referred to delinquincy rates in\u00a0Canada<\/em>.<\/p>\n

And then sometimes, we\u2019re not given\u00a0any<\/em> statistic or takeaway in the headline.\u00a0 We\u2019re just given this:<\/p>\n

\u201cLower Interest Rates, Higher Defaults: What\u2019s Going On?\u201d<\/a>
CBC News
March 5th, 2025<\/p>\n

They\u2019re not wrong.<\/p>\n

Interest rates are dropping and mortgage delinquencies are increasing.<\/p>\n

But mortgage delinquencies have always been viewed as a\u00a0\u201clagging indicator\u201d since the problem began at least three months ago.<\/p>\n

On Thursday, I provided you with the following chart for discussion purposes:<\/p>\n

\"\"<\/p>\n

If you\u2019re interested in the data, the CMHC publishes it HERE<\/a>.<\/p>\n

As we noted last week, the delinquency rate in Canada hit a low of 0.14%<\/strong> in Q3 and Q4 of 2023.<\/p>\n

To see the same rate\u00a0increase<\/em> to 0.22% by Q4 of 2024 is to say that it \u201cincreased by 57.1%.\u201d<\/p>\n

That\u2019s a big increase!<\/p>\n

And while the newspapers are choosing their own statistics, whether Canada-wide, Ontario-wide, or comparing a particular quarter, month, or year to any one period in the past, I\u2019m simply looking at the obvious data in front of me.<\/p>\n

The mortgage delinquency rate was at a\u00a0low<\/em> of 0.14% in 2023.<\/p>\n

The fact that it\u2019s risen to 0.22% as of Q4 last year doesn\u2019t move the needle for me at all.<\/p>\n

What\u00a0would<\/em> move the needle?<\/p>\n

Well, if that figure increases to 0.35% or thereabouts, I would conclude that the increase is troubling.<\/p>\n

However<\/em>, with the delinquency rate sitting consistently around 0.35% from 2013 through 2016, I also wonder whether this actually would be anything to write home about.<\/p>\n

After all, do you remember the alarm bells going off in 2013, 2014, 2015, and\/or 2016 when delinquency rates were at 0.35%?<\/p>\n

No.<\/p>\n

Of course not.<\/p>\n

Nothing was made of this at the time since a delinquency rate of 0.35% is\u00a0still\u00a0<\/em>ridiculously low.<\/p>\n

As I noted at the onset, there\u2019s \u201crelative\u201d and there\u2019s \u201cabsolute\u201d when you look at data, but if you change what that data is relative\u00a0to<\/em>, you can change your entire perspective.<\/p>\n

Case in point: how does Canada\u2019s delinquency rate look\u00a0relative<\/em> to the United Stats or the UK?<\/p>\n

Here\u2019s a great read, and very current!<\/p>\n

\u201cRead The Latest Statistics On Mortgages In Arrears In Canada\u201d<\/a>
Canadian Bankers Association
March 28th, 2025<\/p>\n

If a picture paints a thousand words for you, then try this one on for size:<\/p>\n

\"\"<\/p>\n

\u201cGather round, youngsters.\u00a0 Let me tell you about 2008\u2026\u201d<\/p>\n

I think we all know that Canada escaped the financial crisis seventeen years ago essentially unharmed, but just look at the amount of mortgage delinquencies during the pandemic in the United Stats versus Canada.<\/p>\n

Is there any conclusion to draw here\u00a0other<\/em> than the fact that Canada has among the lowest mortgage delinquency rates in the world?<\/p>\n

The data I have for mortgage delinquencies only goes back to 2013 as that\u2019s all that the CMHC makes publicly available (and I suppose easily accessible, so please email me if you have another source!).<\/p>\n

But the Canadian Bankers Association article has data going bak to the 1990\u2019s.<\/p>\n

And while the following chart from the article is intended to plot unemployment against mortgage arrears, I want to draw your attention to the expanded data on mortgages in arrears:<\/p>\n

\"\"<\/p>\n

In my chart above, I showed you 2013 to 2025, and the conclusion you\u2019re supposed to draw is, \u201cYes, the rate has increased, but it\u2019s still low compared to 2013 \u2013 2016.\u201d<\/p>\n

Showing you\u00a0this<\/em>\u00a0chart now, your conclusion should be, \u201cMortgage in arrears have really never been lower than the past five years.\u201d<\/p>\n

It\u2019s all relative.<\/p>\n

It\u2019s all perspective.<\/p>\n

And if I could conclude with an annoying catch phrase that hit its peak of overuse around 2003, \u201cIt\u2019s all good.\u201d<\/p>\n

I expect to see more articles about mortgage delinquencies, mortgages in arrears, and mortgage defaults in the coming months, but I\u2019m going to conclude that it\u2019s much ado about nothing.<\/p>\n

Disagree if you choose, but there\u2019s no denying the data above.<\/p>\n