Canada’s mortgage market grew at its fastest pace in over 10 years in the first half of 2021, according to new data released by the Canada Mortgage and Housing Corporation (CMHC).

The agency attributed the strong growth to record-low interest rates and “pandemic-fuelled demand for more space.” The findings are in line with previous reports from Equifax and Statistics Canada, which reported record levels of residential mortgage growth since the start of the year.

“In this unprecedented and unexpected economic context, mortgage credit in Canada did continue to grow,” Tania Bourassa-Ochoa, Senior Specialist, Housing Research, at CMHC said during a webinar on the report. “It not only continued to grow, but accelerated…quite rapidly.”

As of June, residential mortgage debt stood at $1.73 trillion, a 9.2% gain from the previous year. The strongest growth was seen in new mortgages, and primarily in the uninsured mortgage segment, which was up 20%.

The average loan amount also rose sharply, jumping 22% year-over-year to $358,000.

Among mortgage lenders, the biggest beneficiaries of this mortgage growth has largely been chartered banks, which hold 78% of overall mortgage debt as of 2021 and 75% of newly originated loans as of Q1 2021.

Mortgage delinquencies (non-payment for 90 days or more) continued to trend down for all lender types, reaching a 30-year low as of the first quarter. The lowest delinquency rates were recorded by credit unions at 0.13% (down from 0.15% in 2020), while the arrears rate for chartered banks fell to 0.20% (down from 0.23% in 2020).

Other Mortgage Market Tidbits

The report included additional insights into other aspects of the mortgage market, including rate selection and lender market share. Here are some of the highlights:

Lender Share

• 73%: The percentage of overall residential mortgage debt held by the Big 6 banks
  • 6%: Mortgage debt held by other chartered banks
• 14%: Mortgage debt held by credit unions and caisses populaires
• 5%: Mortgage debt held by Mortgage Finance Companies (MFCs), insurance and trust companies
• 2%: Mortgage debt held by Mortgage Investment Entities

Interest Rates

• 2.38%: The average 5-year fixed rate secured in 2020
  • 45.8%: The share of new mortgages that were 5-year fixeds
• 2.20%: The average variable rate secured in 2020
  • 21.4%: The share of new mortgages that were 5-year variables (this increased to over 40% as of the second quarter of 2021)
• 55.3%: The share of mortgages originated in 2021 (as of June) that had a term of five years or more
• 14%: The share of all fixed-rate mortgage balances originated in the first half of 2021 that had a term shorter than three years.
  

Mortgage Default Insurance

• 493,000: The number of mortgages originated by chartered banks in the second quarter of 2021, of which 75% were uninsured
• “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,” the report noted. “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.”

Share of Loan-to-Value

Distribution of LTV ratios for newly originated uninsured mortgages, as of June 2021:

• 65% or less LTV: 37.5% of residential mortgages (up from 37.1% in 2020)
  
• 65.01–75% LTV: 17.9% (up slightly from 17.8% in 2020)
  
• 75.01–80% LTV: 44.5% (down slightly from 45% in 2020)
  

canadian mortgages CMHC mortgage rate trends report

Last modified: October 20, 2021