CMHC released their Q4 2018 report on mortgage and consumer credit trends. Maintaining our Canadian culture, The average mortgage loan value reached $209,570, a 3.1% jump from last year. This allowed household debt to continue growing quicker than incomes, and pushed the debt to income ratio to a record high 178.5% in the fourth quarter.

However, on a more positive note, the average balance for new loans actually declined 3.8% year-over-year, which is most likely¬†the result of the mortgage stress test. Any wonder the IMF released a report earlier this week suggesting, “The government is under pressure to ease macroprudential policy or introduce new initiatives that buttress housing activity. This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities.”

Mortgage delinquency rates remain stable, suggesting a gradual slowdown may be entirely possible. Although, as we are sometimes quick to forget, mortgage delinquency rates are very much a lagging indicator and are generally not a great barometer for forecasting the future health of Canadian household balance sheets.

delinquency rates Canada
Delinquency Rates by City

There has been a substantial rise in the growth of the outstanding balance of non-mortgage debt, particularly in Vancouver. Existing mortgage holders in Vancouver saw non mortgage debt balances grow 11.5% year-over-year, suggesting households might be coming under pressure and are borrowing from lines of credit or credit cards to service existing debts.

non mortgage debt growth
Non-Mortgage Debt Growth by City.

This shouldn’t be overly surprising given the ability to refinance your home in Vancouver is becoming increasingly more difficult. Especially since homeowners lost an apparent $89 million in home value in 2018, at least according to an analysis commissioned by the anti-speculation tax and anti-school tax group ‘StepUp Now’.

equity lost
Equity lost in 2018 by municipality.