B.C., Ontario mortgage-holders increasingly miss payments

— Consumers in B.C. and Ontario increasingly missed payments on mortgages and credit cards in the fourth quarter of 2023, Equifax Canada said.

The fourth quarter saw a continuation of what’s been happening for a while now as the impacts of higher interest rates and inflation continue to weigh on consumers, said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, in an interview.

These effects are becoming more visible as people renew their mortgages, she said, and in areas where housing prices are more expensive in Canada.

In Ontario, the mortgage delinquency rate was up 135.2% compared with a year earlier, while B.C.’s rate rose by 62.2%.

Financially stressed homeowners in the two provinces are also increasingly missing credit payments, the agency said, a trend primarily driven by homeowners who are 36 and younger.

“What we are seeing in Ontario and B.C. in particular is that as consumers are coming up to the end of their term periods on their mortgage, whether that’s fixed or variable, and they’re renewing their mortgage, there are payments shocks that are happening for individuals, and that’s something we knew was coming,” said Oakes.

“And for some individuals, unfortunately … it’s a tipping point.” Younger consumers tend to have higher mortgage amounts owing, and less savings to lean on, she said. “As you tend to get financial stress, the credit card does tend to be one of the first things where we see missed payments coming through.”

Housing prices are higher in B.C. and Ontario, Oakes said, contributing to the heightened levels of delinquency and missed payments.

Outside of B.C. and Ontario, Equifax Canada said mortgage delinquency rates are rising at a slower pace and are still much lower than pre-pandemic.

Mortgage delinquency rates across the country rose 52.3% in the fourth quarter compared with a year earlier, while delinquency rates for non-mortgage debts that are more than 90 days overdue rose by 28.9%.