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HomeNewsMortgage Debt Growth Highest In A Decade According To CMHC

Mortgage Debt Growth Highest In A Decade According To CMHC

KAWARTHA LAKE-Record-low interest rates and strong housing market activity driven by a pandemic-fuelled demand for more space, have propelled residential mortgage debt growth during the first half of 2021 up to levels not seen in a decade, according to Canada Mortgage and Housing Corporation (CMHC)’s annual Residential Mortgage Industry Report released today

The report provides in-depth view of the residential mortgage market in Canada from mortgage origination to funding, covering insured and uninsured mortgages, and encompasses activity from all mortgage lender types. It is based on data available at the end of the second quarter of 2021.

“We are also seeing that mortgages in arrears have reached a 30-year low. Many borrowers benefitted from a mortgage deferral program offered by CMHC and lending institutions and were able to resume regular payments. As well, more consumer savings and the growth in disposable income have contributed to the ability of Canadians to make the payments on time.” said Tania Bourassa-Ochoa, CMHC, Senior Specialist, Housing Research

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures. The overall composite/single-family benchmark price in the City of Kawartha Lakes was $620,700 in September 2021, a substantial gain of 33.1% compared to September 2020 according to the Kawartha Lakes Real Estate Association.

The dollar value of all home sales in September 2021 was $85.9 million, down by 4.2% from the same month in 2020. New listings in Kawartha Lakes were 5.1% below the five-year average and 9% below the 10-year average for the month of September.

Highlights from the report:

Mortgage lending trends

  • Canadian mortgage debt service burden as a share of disposable income continued to build up in Q1 2021, driven by growth in scheduled principal payments, reflecting in part the larger mortgages resulting from the rapidly increasing housing prices in 2020.
  • Uninsured new mortgage credit witnessed a 20% growth in volume, taking over an increasing share of the residential mortgage market. The most noteworthy increase was in the issuance of uninsured mortgages for purchases of property, which more than doubled the amount originated in the same quarter in 2020.

Mortgage rate trends

  • The large discount between fixed and variable rates drove more borrowers to opt for variable-rate mortgages. Over 40% of new mortgage balances issued in Q2 2021 have variable rates.
  • New mortgage holders continued opting for longer-term mortgages to take advantage of historically low interest rates.

Mortgage insurance trends

  • The Big 6 banks provided a larger share of newly extended mortgages in 2020 (68%) than in 2019 (67%).
  • The remaining one fifth of new mortgages in 2020 were handed out by non-bank lenders.

Mortgage lender type trends

  • In 2019, Canada’s big six banks maintained their strong foothold in the housing finance market, with a 67% market share of newly extended mortgages.
  • Mortgage Finance Companies (MFCs) hold 20% of the insured mortgage space and credit unions stand at 12%.

For more information see the Residential Mortgage Industry Report as well as the Residential Mortgage Industry Data Dashboard.



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