Canada's mortgage book improving

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New CMHC data revealing the improved quality of Canada’s mortgage book may encourage brokers to tell both Jim Flaherty and Julie Dickson “I told you so” for even suggesting further tightening.

“As of June 2013, 0.31 per cent of residential mortgages were three or more months in arrears, compared to 0.33 per cent twelve months earlier,” CMHC’s yearly Canadian Housing Observer report states. “Canada’s internationally recognized conservative mortgage lending practices are among the key factors contributing to this outcome.”

Canadians’ improving mortgage habits are attributed to the various rule changes implemented by OSFI and the Canadian government in 2012, including shortening the maximum amortization period and reducing the maximum loan-to-value ratio on home equity lines of credit, according to the report.

The CMHC’s 184 pager deeply delves into a plethora of housing market topics, such as Canada’s condominium market, housing finance, a breakdown of housing markets, affordability and sustainable housing.

In terms of home financing, Canadian mortgage holders, as a whole, are making larger prepayments in a bid to pay off their mortgages sooner.

“About 31 per cent of recent buyers reported making a lump-sum payment and/or increasing their regular mortgage payment in 2012 in order to pay off their mortgage sooner and 44 per cent had their payment set above the minimum,” the report continues.

And although the amount of outstanding mortgage credit has increased year-over-year, the annual growth of outstanding credit was cut almost in half this year over last.

“Total residential mortgage credit outstanding stood at $1.172 trillion in April 2013, up 5.2 per cent compared to a year earlier,” according to the report. “This was below the average annual growth rate of 9.3 per cent from 2001-2010, reflecting a moderation in housing market activity levels.”

  • kac on 2013-12-19 10:37:46 AM

    This report is about as shewed as one can imagine,while i am sure the mortgage performance on the banks books of insured mortgages has performed better it is ultimately because it is so difficult for the blue collar worker to obtain any financing at all,once the govt tightened their lending criteria the banks tightened their nooses even more and as a result their mega profits started to shrink thus chopping jobs and getting rid of blue collar accounts,right HSBC? I believe it has been said over and over that secured mortgage debt is really not the problem.I tried to have an applicant approved just recently with 5% down with a 617 credit score. I was turned down by a local credit union,scotia and a few others. Funny that the credit union had just advanced $16k on a note loan,scotia $49k on a vehicle loan and a few other creditors an additional $20k in unsecured debt all in the last year. Is it really the mortgage debt that is a problem in our society. CMHC has no losses on this debt so the govt really doesn't care.

  • Lance on 2013-12-19 11:57:59 AM

    Kac - I think your client's real problem is they put the car ahead of the house. Something I've seen a LOT of the past 9 mos.

  • Paolo Di Petta | dipettamortgage.com on 2013-12-19 6:59:44 PM

    CMHC's data is really called into question though - http://mrt.gs/19WsP2O

    They say less than 1/4 of Toronto Condos are owned by investors, but also admit that their data is incomplete. http://mrt.gs/19WsP2O

    I haven't had a chance to read the report, but I'd expect them to have similar data collection issues in some other areas. Generally, it's prudent to consider that this sort of data looks better than it actually is.

    Besides, if CMHC was so sure of itself, why the extra risk fee? Actions speak louder than words, so watch what they do, not what they see.

  • Paolo Di Petta | dipettamortgage.com on 2013-12-19 7:00:17 PM

    CMHC's data is really called into question though - http://mrt.gs/19WsP2O

    They say less than 1/4 of Toronto Condos are owned by investors, but also admit that their data is incomplete. http://mrt.gs/19WsP2O

    I haven't had a chance to read the report, but I'd expect them to have similar data collection issues in some other areas. Generally, it's prudent to consider that this sort of data looks better than it actually is.

    Besides, if CMHC was so sure of itself, why the extra risk fee? Actions speak louder than words, so watch what they do, not what they say.

  • kac on 2013-12-20 10:42:19 AM

    @Lance,i agree with you and certainly in no way say the consumer is right to go crazy on borrowing in this fashion. It just seems to be a little too simple to obtain this type of credit with these FI's who are so tough on mortgage approvals.

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