Canadian mortgages typically feature five-year fixed terms, and the system is nationalized. So, mortgage products and lending policies are similar across the country. Back in 1954, the Canada Mortgage and Housing Corporation (CMHC) enabled domestic banks to lend mortgages to promote affordable homeownership.
That was a smart move.
Because Canadian mortgage statistics reveal that it offset high ratio mortgages where the downpayment is lower than 25% of the property price. This kind of mortgage needs insurance to minimize lenders’ risk.
Here are a couple of questions that we’re looking to answer:
What are the main types of mortgages in Canada?
How do mortgages work in Canada?
What do mortgage rates say about the country’s economy?
Was there an upswing or decline of borrowing for housing needs in the 2020 pandemic?
Let’s crack on:
Amazing Mortgage Statistics Canada (Editor’s Choice)
- The five-year fixed mortgage has an average mortgage rate of 2.65% in Canada
- There was a hike of 33% in new mortgages issued by banks in Q4 2020.
- In 2020, banks issued deferrals to 797,900 Canadian mortgages.
- Over 60.7% of Canadian homes have mortgages attached to them, the 2016 census states.
- The First-time home buyer incentive program (FTHBI) offers to cover 5% or 10% of a first-time buyer’s purchase of a newly-built home.
- The mortgage arrears rate is lowest in Ontario, at 0.09% as of June 2021.
General Canadian Mortgage Statistics
1. The standard five-year fixed mortgage featured an average mortgage rate was 2.65% in 2020, down from 3.14% in 2019.
The highest rate levied was on the insured type of mortgages that run for less than a year, with a fixed rate of 5.48%. The same type also led the charts in 2019 when its rate was 5.59%.
How did variable rates do in the Canadian mortgage market?
2. Insured variable-rate mortgages were at 2.3% in 2020, down from 3.93% in 2019, Canadian mortgage news and trends reveal.
Additionally, uninsured variable rates were 2.14% in 2020, down from 3.69% in 2019.
The thing is:
There was an overall decline in interest rates in 2020 when compared to 2019. This enhanced the buying power of residents and allowed several non-bank lenders to operate in the housing market.
3. Canadian mortgage delinquency rates in 2020 stood at 0.25%, down from 0.3% in 2019.
(Sources: CMHC, Statista)
Toronto had the lowest rates – just 0.1% of delinquent mortgages by the end of 2020. In the same period, Montreal reported 0.2% delinquencies, while Vancouver had 0.14%.
A mortgage is declared delinquent after nine months of late repayments. But what kind of lenders reported delinquencies?
Let’s break down delinquent mortgage statistics:
4. Private lenders recorded 1.98% of delinquencies in Q2 2020.
(Sources: CMHC, Statista)
Additionally, mortgage finance companies reported 0.3% of delinquencies. Meanwhile, Canadian banks declared rates of only 0.26%. Due to the pandemic, 2020 witnessed an overall increase in delinquencies than 2019.
5. Canadian mortgage statistics from 2021 reveal a hike of 33% in new mortgages issued by banks at the end of 2020.
Although it was a pandemic year, 2020 added a high portion of mortgages worth $305 billion, growing the Canadian mortgage market size.
Mortgage trends in Canada in 2019 prove that housing finances were not as great as in 2020.
So, what made 2020 a good year for lenders and home shoppers?
Simply put, there were record low interest rates, an upshot in housing demands, and a higher rate of household savings.
6. March 2020 recorded the lowest interest rates ever, pushing up mortgage debts to a record high of $108 billion by November.
(Source: 150 Stat Can)
Canadian mortgage debt statistics for 2019 was less than $72 billion, while 2018 recorded just $46 billion in mortgage debts.
The high rate of mortgage borrowing in 2020 was supported by government schemes like the Canadian Economic Recovery Benefit and the six-month mortgage deferral option offered by financial institutions.
7. Canadians continue to prefer fixed-rate mortgages of five years, as this type accounted for 49% of existing loans in 2020, Canadian mortgage statistics confirm.
(Source: 150 Stat Can)
This loan type has grown beyond the 2019 figure of 42% of outstanding loans.
As interest rates dropped to a record low in 2020, the preference for variable-rate mortgages grew over their fixed-rate counterparts in January 2020.
8. Addressing the economic crisis of 2020, banks issued deferrals to 797,900 Canadian mortgages.
(Sources: 150 Stat Can, CBA)
Furthermore, non-bank lenders exempt from the Office of the Superintendent of Financial Institutions (OSFI) offered 100,372 deferrals on uninsured mortgages in Q2 2020.
The thing is:
March 2020 brought on rampant unemployment due to business closures. So, the OSFI considered this step necessary to enable Canadians to battle the crisis. Canadian mortgage rate trends have witnessed swift paybacks, and by February 2021, 777,800 deferred mortgages had expired.
9. To revolutionize how mortgages work in Canada, the Government has devised the First-time home buyer incentive program (FTHBI) that covers 5% or 10% of a first-time buyer’s purchase of a newly-built home.
This new Canadian mortgage trend is basically a shared equity mortgage between individuals and the government. As a result, it’s a step in promoting affordability and eradicating homelessness in the country.
Let’s look at the other benefits of this scheme:
- It covers 5% of a first-time buyer’s purchase of a resale house or a mobile home.
- The receiver will have to repay the incentive according to the property’s market value at the time of repayment.
- If a homebuyer got a 5% incentive, they would have to repay 5% of the home’s value at repayment.
- If a homebuyer got a 10% incentive, they would have to repay 10% of the home’s value at repayment.
- The incentive runs for 25 years. The term ends when the property is sold if this happens before the completion of 25 years.
The great thing about the incentive is that it comes with no pre-payment penalty. Buyers can pay back the loan in full before the end of the term.
10. Only 0.22% of mortgages from the chartered banks were in arrears as of March 2021, mortgage statistics for Canada confirm.
(Source: Canadian Mortgage Trends)
The rate was lowest in Ontario at 0.09% and highest in Saskatchewan at 0.76%.
Going by these numbers, it is safe to say that housing demands will sustain the average mortgage rates in Canada, and the market will remain abuzz with activity for years to come.
11. Canadian home ownership statistics for 2016 reveals that there were 642,528 new mortgage holders and 137,968 repeat buyers that year.
These translate to 406,678 new loans. Repeat purchased loans amounted to 94,429.
Both these statistical categories decreased in the next year.
Check this out:
12. In 2017, the Canadian mortgage market witnessed 617,748 new mortgages (-3.9%) while repeat purchases stood at 130,502 (-5.4%).
New mortgage loans taken out in 2017 numbered 386,308 (-5%), while repeat loans stood at 92,173 (-5.4%).
13. In 2016, Ontario led the market, with 167,749 new loans, Canadian mortgage market statistics reveal.
Quebec had the second-largest number, with 84,486 loans. In the same year, other provinces in decreasing order of new mortgages were:
- British Columbia: 66,552
- Alberta: 47,307
- Manitoba: 12,211
- Saskatchewan: 10,524
Types of Mortgages in Canada
Let’s take a dip into the Canadian mortgage market to learn about the various types of mortgages.
Right off the bat, Canada’s housing finance features five main types of mortgages:
If home-buyers opt for full or partial repayment of the loan before the term ends, open mortgages are the obvious choice. This kind of loan comes without a pre-payment penalty but is open to fluctuating rates of interest.
Closed mortgages have lower interest rates than open ones. However, these have their terms predefined, and borrowers are liable to a penalty for pre-payment. Borrowers choose whether they’d like adjustable-rate mortgages or fixed-rate mortgages.
Lenders typically allow a payment of 5% to 20% of the original sum once a year, penalty-free. This sum generally goes towards paying back the principal amount, according to Canada’s mortgage amortization norms.
These are a switch between open to closed mortgages or variable to fixed rates, as the case may be. Convertible mortgages operate upon prior understanding between lenders and buyers, and interest rates are converted to the new mode of mortgage selected, as offered by the lender.
As the name suggests, these mortgages have a range of different products on offer under a single mortgage registration. The registration may include a mix of fixed-rate and variable-rate mortgages. Economically solvent payees choose hybrid mortgages as part of their overall fiscal plan.
This type of mortgage allows clients 55 or older to convert their home equity into a single payment or monthly cash payments. The lender draws down a homeowner’s equity and lends it to the homeowner – the borrower. The loan balance is due when the homeowner no longer wishes to live in the home as their principal residence or when the borrower dies. The loan balance is paid off with the proceeds of the property’s sale, either by the owner or their heirs.
June 2021 marked peak prices in property sales. So, the Canadian housing finance market is proving to be a promising investment center as per the latest Canadian mortgage statistics.
One of the few areas that were not affected by the COVID-19 pandemic, the mortgage market in the Great White North has enjoyed steady purchases of property and growth in the number of private lenders.
With the past program of mortgage deferral, the percent of mortgage arrears today is at an all-time low, which is excellent news.
The average mortgage in Canada (newly-originating mortgage) is $303,400 as of 2021.
March 2020 recorded the lowest Canadian bank mortgage interest rates, around 0.32%. But the rates are on a quick rise. As of today, the interest rates are hovering about three times the March 2020 figure.
One in every three mortgages originating in Canada is insured today. This accounts for 35% of all Canadian mortgages.
The latest census lays down that over 60.7% of Canadian homes have mortgages. This figure is up by 3.58% from Canadian mortgage statistics for 2011.