Ontario and BC Face Significant Rise in Mortgage Delinquencies, Equifax Data Reveals

In a recent update, Equifax's latest findings indicate a troubling trend in Canada's real estate market, particularly spotlighting Ontario and British Columbia. Despite the Bank of Canada's decision to maintain the current interest rates—with a potential cut on the horizon—many Canadian homeowners are still grappling with the financial strain of higher mortgage payments. This situation has led to a noticeable increase in mortgage delinquency rates across the country, raising concerns among market analysts and homeowners alike.

Equifax's data paints a stark picture: between the final quarters of 2022 and 2023, Canada witnessed a 52% surge in mortgage delinquencies. Though this number represents a relatively small fraction of all mortgages in Canada—merely 0.14%—the situation appears more dire when zooming into specific provinces. Ontario and British Columbia, two of the country's most populous regions, reported even more alarming increases of 135% and 62% in mortgage delinquencies, respectively, surpassing pre-pandemic figures.

The root cause of these climbing delinquency rates lies in the soaring interest rates, particularly impacting those due for mortgage renewals. Homeowners in Ontario and BC are facing an average increase of over $680 in their monthly payments upon renewal, a figure significantly higher than the national average increase of $457. Rebecca Oakes, Vice President of Advanced Analytics at Equifax Canada, emphasizes the critical nature of these renewals, pointing out the challenges faced by homeowners who secured their mortgages at historically low rates in 2020.

Adding to the financial woes of Canadians, the report also highlights a sharp uptick in insolvency levels in Ontario and BC, with mortgage holders filing for bankruptcy at rates of 76.5% and 46.5%, respectively. While these figures are concerning, it's somewhat relieving to note that the overall insolvency rates across Canada remain below those seen before the pandemic.

Beyond mortgage payments, Canadian households are also struggling with other financial obligations. Delinquency rates for non-mortgage debts overdue by 90 days or more have escalated by nearly 29%, driven by factors such as the high cost of living, inflation, and the burden of credit card payments.

This convergence of financial pressures is undeniably stretching Canadian budgets thin. As Equifax's report sheds light on the mounting challenges facing homeowners, particularly in Ontario and BC, it underscores the broader economic pressures that continue to test the resilience of Canadians across the country.