“It takes a lot to get Canadians to fault on mortgages,” said Brendon Ogmundson, chief economist at the British Columbia Real Estate Association, referring to the financial strength of B.C. mortgage holders.
Rising interest rates, high mortgage payments and financial pressure have been top of mind when it comes to owning a home in Canada, but B.C. mortgage and foreclosure data reveal that homeowners in the province are resilient.
The provincial mortgage delinquency rate, the share of loans that are past due by 90 days or more, came in at 0.11 per cent for the first quarter of 2023, according to Canada Mortgage and Housing Corp. data.
“Banks don't like the foreclosure process, it's a last resort. But what we would need to see is a rising unemployment rate, which we don't have. The labour market is really strong, so if you have households where people are employed, they tend to make their mortgage payments,” Ogmundson said.
Foreclosure data for B.C. also tells a similar story.
The number of new B.C. Supreme Court foreclosure cases opened in the 2018-19 fiscal year reached 1,656. It since fell to 1,468 as of the 2022-23 fiscal year. This represents a decrease of 11.4 per cent.
“The data shows us that, actually, the foreclosure rate and delinquency rates have been falling. So in reality, that is the real story,” said Marci Deane, president of the Canadian Mortgage Brokers Association – B.C.
“Between myself and another board member, just anecdotally, we reached out to a handful of lenders between us. And all of them have reported no change in terms of delinquencies going up.”
Concerns over household financial stability have increased alongside the Bank of Canada’s 10 rate hikes since March 2022. The central bank most recently raised its key rate 25 basis points to five per cent on July 12. While mortgage data shows that B.C. mortgage holders have remained resilient, credit card and car payment data signals increasing financial pressure, said Ogmundson.
The result is mortgage holders may be feeling the weight of inflation and rate hikes, but have still been able to withstand any financial impact on their mortgages. Mortgage payments are also the last bill that someone would typically stop paying, according to Ogmundson.
“We're starting to see a little bit of stress in things like auto loans, credit cards … and also what are called installment loans, unsecured personal loans. So we are starting to see cracks in household vulnerability,” he said.
The province’s highest-ever delinquency rate – 0.43 per cent – was recorded throughout the majority of 2013 and the first quarter of 2014.
Kelowna currently has the province’s highest delinquency at 0.13 per cent. Victoria and the Abbotsford-Mission area both have rates of 0.07 per cent, while Vancouver’s is 0.08 per cent.
“People are making a very a good living in Vancouver, in particular, and even all around B.C. … Is it harder for first-time buyers to get in? Absolutely. But that's not talking about delinquencies, that's not the story. In terms of existing homeowners, they're staying the course,” Deane said, who works as a mortgage broker in North Vancouver.
Ogmundson said that mortgage delinquencies and foreclosures will remain the same if prices continue to rise. If a homeowner is at risk of defaulting while prices remain high, they can simply sell their home.