Canadian mortgage arrears have reached a 12-year high, with 13,752 mortgages in arrears as of April. This represents a 26% increase from last year and an 89% rise from the cycle lows in August 2022. The arrears rate now sits at 0.28%, a 9-year high.
The sudden rise in arrears is not solely due to interest rates, as the problem began to surface when the overnight rate was only 1.0%. Instead, it is attributed to the scale of debt, which has amplified sensitivity to rate hikes. Meanwhile, the count of mortgages held by banks has fallen, with a 0.1% decrease in April, marking the seventh consecutive month of decline.
For Calgary buyers, sellers, and investors, this shift in the mortgage market may have significant implications. As the number of mortgages in arrears continues to rise, it may lead to a decrease in housing prices and a shift in the balance of power between buyers and sellers. Additionally, investors may need to reassess their strategies in light of the changing mortgage landscape.
Sources: Better Dwelling