12/2/2023 0 Comments 2016 mortgage defaultsThese included an interest-rate stress test for all mortgages and, to help curb property speculation, new rules that exempt foreign buyers from earning tax-free capital gains on residential properties. In January 2017, in an attempt to address these risks, the Office of the Superintendent of Financial Institutions (OSFI) implemented several new restrictions. By late 2015, concerns about the strength of Canada’s housing market were beginning to grow, with fears that the markets were overheating in several Canadian cities. Household mortgage debt leading into and during the pandemicįollowing the financial crisis in 2008, significant attention was directed to ensuring stability in financial markets around the world and avoiding the type of risky lending that could result in a new contagion in the financial system. The focus of this paper is on household mortgage borrowing, that is, the debt acquired to finance the purchase of a property. It draws analysis from a wide array of sources, including Statistics Canada’s National Balance Sheet Accounts and Monthly Credit Aggregates, as well as information from Statistic Canada’s Mortgage Loans Report and the Bank of Canada’s Report on New and Existing Lending. This is the first in a series of papers exploring the trends in borrowing activity observed among Canadian households and businesses leading up to and during 2020. New York witnessed the largest decrease, falling six basis points from June to 0.82%.This work would not have been possible without the invaluable contributions and expertise of innumerable dedicated staff from Statistics Canada including Carolina Cabañas-Leòn, Gilbert Côté, Lydia Couture, Yves Gauthier, Lei He, Dragos Ifrim, Matthew Kelly, Dave Krochmalnek, Denise Lafleur, Alexander Li, Alexander McGuire, Daniela Ravindra, Étienne Saint-Pierre, Akram Sirag, and Jennifer Withington. The report also spotlights the consumer default composite indices for five major cities, shown in the chart below. “However, retail sales excluding autos as well as auto sales are down slightly since April, while home sales are little changed in recent months. In the year ending June 2017, consumer credit outstanding rose 5.7%, outpacing most spending categories across the economy,” he said. “Consumers’ use of credit is growing and the level of consumer credit outstanding is at an all-time high. “Default rates for autos and first mortgage loans are at their lowest points in the last ten years, while bank card defaults remain modest,” says David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.” This second chart gives a broader picture and shows the changes in default rates over the last ten years. (Source: S&P/Experian Consumer Credit Default Indices) The indices represent a comprehensive measure of changes in consumer credit defaults and include bank card and auto loan default rates.Īs seen in the chart below, the first mortgage default rate increased two basis points from June to 0.62%. In fact, the mortgage default rate for first and second mortgages aren’t too far off from their July 2016 level, as homebuyers get better at paying their mortgage on time. Despite a slight increase in July, the default rate for first mortgage loans still sits at its lowest point in the last 10 years, according to the latest S&P/Experian Consumer Credit Default Indices.
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