Late payments of mortgages in Ontario have declined to their levels back in 1990, just before the real estate crash that led to a massive growth in the number of delinquencies.
According to the Canadian Bankers Association (CBA), Ontario’s mortgages in arrears (excluding those from alternative lenders and private mortgages) sharply declined by 18.4 per cent year-over-year in April. Mortgages in arrears are defined as those with late payments in excess of 90 days.
The CBA noted that this level matched the lowest in Ontario’s 27 years of data. Arrears represented 0.11 per cent of all mortgages in Ontario, a proportion last seen in January 1990.
Better Dwelling contributing editor and markets observer Daniel Wong explained that the development could mean one of two things: “most likely it means the economy is in hyperdrive or the market is in a major real estate bubble.”
“If the economy is in hyperdrive, wages are growing at such a rate that prices are being easily absorbed. There’s some evidence that wages in and around Toronto are higher than most people think,” Wong wrote.
“Whether they grew enough to absorb the massive increase in prices in places like Toronto and Guelph, we won’t know for a couple of years. That’s when Statistics Canada will give us a thorough update on 2017’s wages. Although, early indicators like the LFS aren’t showing robust wages growth.”
Wong opined that the current levels are “artificially low”. However, “it doesn’t mean it can’t go lower,” and he went on to caution that “this number will have to pop back up closer to the average at some point. The lower it goes, the faster it will climb higher.”
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