Calgary and Edmonton are seeing higher delinquency levels due to a disruptive economic trend: a shift away from employment in oil and gas, and towards the service sector.
The latest edition of the CMHC Mortgage and Consumer Credit Trends Report indicated that mortgage delinquencies have had an overall upward trend in the Prairies during this quarter.
In particular, the situation in the two major Alberta cities significantly upended household incomes. Edmonton also suffered drops in full-time work.
Calgary’s mortgage delinquency rates were hovering around an average of 0.35%, across all origination amounts. The rate was above 0.40% among those who borrowed less than $100,000.
Meanwhile, mortgages in the $100,000 - $200,000 range had the highest incidence of delinquency in Edmonton, at 0.65%.
Elsewhere in the Prairie region, Regina and Saskatoon saw delinquencies fall as loan amounts increase. Mortgages less than $100,000 had a 0.79% rate in these cities, and loans valued at $400,000 or more posted a 0.4% rate on average.
Holding a mortgage also seems to have had an effect on ensuring that other loans are paid on time.
“In the Prairie region, the delinquency rates for credit cards, lines of credit and auto loans for mortgage holders tend to be lower than non-mortgage holders. Mortgage holders normally have higher credit scores and lower credit delinquency rates than consumers without a mortgage,” CMHC stated.
Currently, the Prairies boast of strong average credit scores, ranging from 759 to 765. Mortgage payments are also robust, with Calgary having the highest level in the region at $1,533.
“The decrease in average weekly earnings of Albertans, the downward pressure on house prices in Saskatchewan and higher mortgage rates all contributed to increased delinquency rates in Prairie CMAs. However, average credit scores remained excellent despite the increases in delinquency rates and higher average monthly obligations,” CMHC senior economics analyst Christian Arkilley said.