Even before the pandemic, there was a trend towards higher figures in Toronto and Vancouver. These two municipalities have seen record lows in 2018 and prior. But the mortgage delinquency numbers across Canada, on the whole, are rising.
Better Dwelling tracks the Canadian Real Estate Market. The Better Dwelling entity was founded by Stephen Punwasi, who is an analyst. They indicate that mortgage delinquencies are rising.
How are Mortgage Delinquencies Measured?
In Vancouver, mortgage delinquencies are measured by looking at the number of mortgages that are overdue for more than 90 days. In the first quarter of 2020, this number reached 0.13%. These numbers show an increase over the same quarter for 2019, rising from a percentage rate of 0.1% in 2018.
In Toronto, the numbers are showing a 10% increase between 2019’s first quarter and 2020’s first quarter. The first quarter’s last few weeks were the beginning of the pandemic and the start of lockdowns in Canada. But the trend towards higher numbers was already established in Toronto and Vancouver before this, so we can’t say COVID-19 is to blame.
What is a Mortgage Delinquency Anyway?
Mortgage delinquency refers to how quickly a home can be converted to its cash value. When the market is hot, homes are selling rapidly. So owners who cannot make their payments can typically, list their home, get an offer and close within three months. If this model is in play in the market, the delinquency rates are kept low. When the process takes longer, then the prices get higher.
Better Dwelling notes that the market as it stands is stalling. The longer it takes to make a sale, the more the delinquencies will rise. With high default rates, many homeowners are unable to exit their real estate in a fast manner.
Steve Saretsky, a realtor in Vancouver, notes that the change in a rising and falling delinquency rate is something we should be watching into 2021. Saretsky thinks the foreclosure rate will also increase in the next couple of years and that the process will be very long and drawn out for British Columbia. In a recent report he notes that “From the time you miss a mortgage payment to the time the house sells in court, it takes an average of between 12 to 15 months,”