Introduction: The Canadian residential mortgage market has witnessed intriguing shifts and trends in the first half of 2023, as highlighted by CMHC’s latest report. From changes in consumer behavior to alterations in market shares, the landscape appears to be transforming.
Key Findings and Insights:
- Changing Landscape: The initial half of 2023 saw a slump in home sales, impacting new mortgage activities.
- Consumer Behaviour Shifts: Canadians lean toward longer mortgage terms and extended amortization periods, favoring 3-to-5-year terms.
- Debt Concerns: While mortgage arrears remain low, increased challenges with auto loans and credit card payments are notable.
Consumer Behaviour Shifts to Longer Terms: Canadians are embracing longer mortgage terms, reflecting a shift away from shorter options. This shift suggests a decline in immediate interest rate expectations and a preference for more extended repayment periods.
Debt Challenges and Delinquencies: While mortgage arrears remain relatively low, an increase in credit card and auto loan delinquencies indicates some consumer struggles. Second- and third-stage mortgage delinquencies have risen, reflecting financial vulnerabilities for some borrowers.
Traditional vs. Alternative Lenders: Traditional lenders, especially chartered banks, observed a slowdown, while alternative lenders increased their market share. Mortgage investment entities and non-bank lenders witnessed notable growth, signifying a shift in market dynamics.
Conclusion: The CMHC report provides a snapshot of the evolving Canadian mortgage landscape, with consumers favoring longer terms and lenders experiencing shifts in market shares. While mortgage arrears remain low overall, the increase in non-mortgage debt delinquencies underlines potential financial strains for some borrowers.