Mortgage debt is rising at its fastest pace in over 10 years, yet arrears have fallen to record lows.

Meanwhile, more mortgage shoppers are opting for variable rates and a growing percentage of mortgages are uninsured (typically those with less than 20% down payment).

These are among the key findings from the Canada Mortgage and Housing Corporation (CMHC), which released its latest Residential Mortgage Industry report this week.

The data provides a snapshot of current mortgage market trends and consumer preferences as of the first half of 2021.

The rise in mortgage volumes is attributed primarily to growth in new mortgages as well as higher mortgage amounts due to rising home prices.

Despite the growth in mortgage debt, the percentage of borrowers who are behind on their payments by at least 90 days has fallen to a 30-year low, CMHC noted.

“Many borrowers benefited from a mortgage deferral program offered by CMHC and lending institutions and were able to resume regular payments,” said Tania Bourassa-Ochoa, Senior Specialist, Housing Research at CMHC. “As well, more consumer savings and the growth in disposable income have contributed to the ability of Canadians to make the payments on time.”

Let’s dive into some of the additional findings from the report below…

Mortgage/Housing Market

• $358,000: the average loan amount
  • +22% year-over-year
• $1.7 trillion: total outstanding residential mortgage debt
  • +9.3% year-over-year
• 217,880: housing starts
  • +4.4%
• 551,392: home sales (MLS)
  • +12.6%
• $567,699: average price
  • +12.9%

Mortgage Rate Types and Terms

Fixed rates

• 2.38%: The average 5-year fixed rate in 2020
• 32.1%: The percentage of new mortgages obtained in Q2 2021 that were 5-year fixed rates
  • vs. 45.8% in 2020

Variable rates

• 2.20%: The average 5-year variable rate in 2020
• 40%: The percentage of new mortgages obtained in Q2 2021 that were variable rates
  • vs. 21.4% in 2020
• 59 basis points: The average spread that variable mortgage rates were below the average fixed rate for uninsured mortgages with terms of five years or more as of June 2021

Mortgage-Default Insurance

• 35%: The percentage of outstanding residential mortgages extended by chartered banks that were default-insured in Q1 2021
  • vs. 60% in 2012

For federally regulated lenders, default insurance is mandatory for mortgages where the borrower’s down payment is less than 20% of the purchase price. The CMHC report shows a larger percentage of buyers putting down at least 20% down on their purchase compared to previous years.

“This surge in uninsured purchases is mirrored by a sharp increase in end-of-contract principal repayments of uninsured mortgages a direct result of the record level property sales in the previous quarters,” Bourassa-Ochoa said. “This suggests that more repeat buyers are taking advantage of the rising property prices and low interest rate environment to cash out and potentially upgrade to larger space.”

Delinquency Rates

• 0.20%: chartered banks
  • vs. 0.23% in 2020

CMHC says this decline in arrears has been supported largely by the fact that borrowers who experienced financial difficulties could have taken advantage of mortgage deferrals offered by banks and other lenders.

Chartered banks provided mortgage relief to nearly 800,000 borrowers in 2020, representing more than $5.5 billion in mortgage payments, while non-bank lenders provided support to another 100,000 borrowers. The vast majority of borrowers were then able to resume normal mortgage payments by the end of the year.

“In addition, overall consumer savings increased and the growth in disposable income remained positive which helped Canadians to make their monthly mortgage payments on time,” the report noted.