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Missed mortgage, credit payments in Canada hit pre-COVID highs: Report

More than 1.26 million people missed a credit payment in Q1 2024, says Equifax Canada

(AUSTRALIA OUT) American express visa and mastercard credit cards (Photo by Fairfax Media via Getty Images via Getty Images)
(AUSTRALIA OUT) American express visa and mastercard credit cards (Photo by Fairfax Media via Getty Images via Getty Images) (Fairfax Media via Getty Images)

The financial burden on Canadian households intensified in the first quarter of 2024, with missed payments on mortgages and other forms of credit rising to pre-pandemic levels, according to Equifax Canada.

The “challenging economic conditions” since the pandemic have prompted Canadians to make various moves to manage their finances, including extending their mortgage lengths to reduce payments, says Rebecca Oakes, Equifax Canada’s vice-president of advanced analytics. “It’s not just homeowners feeling the strain. Whether you own or rent, the high cost of living remains a heavy burden for many.”

More than 34,000 Canadians missed a mortgage payment in Q1, nearly 23 per cent more than in Q1 2023, according to Equifax’s latest Consumer Credit Trends Report. More than 1.26 million people missed making some kind of credit payment in the quarter, up 12.2 per cent from last year.

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In an interview with Yahoo Finance Canada, Oakes says the Bank of Canada’s decision to cut interest rates by 25 basis points, though a welcome move for Canadians, isn’t likely to have a significant impact.

“It's only really scratching the surface in terms of what it's going to do to payments,” she said. “It needs to go down at least a full per cent, maybe, before there's probably some meaningful impact to individuals.”

Oakes notes the financial stress is not distributed evenly across Canada, with certain indicators higher in Ontario, British Columbia and Quebec. Those provinces all had “above-average jumps,” in the range of 13 to 15 per cent, among consumers missing some kind of credit payment in Q1.

“When you look overall, the numbers aren't terrible but then when you start to look at certain geographies, you start to see a lot more stress coming through,” Oakes said, adding that the high costs of owning or renting a home in certain cities can be a major driver.

In Ontario, the total of mortgage balances at 90 days or more without payment — known as “severe delinquency” — topped $1 billion for the first time. (Though delinquency rates in Toronto are up over 2020 figures, the growth of that dollar figure has been driven primarily by soaring home prices and resultant mortgage costs, Oakes says.)

Equifax’s report aligns with other recent research showing that ongoing financial stress and high prices have dampened the housing market and big-ticket spending. The report says new mortgages “hit an all-time low” in Q1 “as consumers held off making big purchase and financing decisions amid rate-cut speculations.” Nationally, there was a year-over-year drop in mortgage refinancing levels (down 2.6 per cent) and in first-time home buyer volumes (down 10 per cent).

On a provincial level, Alberta’s new mortgage originations actually rose 10.6 per cent year-over-year, with housing affordability concerns likely fuelling interprovincial migration, Equifax notes.

“As high home prices and reduced affordability continue in some geographies, more consumers are making the decision to relocate to more financially accessible regions,” Oakes said. “In the last 12 months, the number of individuals who moved from Ontario and British Columbia to other provinces exceeded those who moved to Ontario. Almost 71 per cent of all interprovincial movement to Alberta came from those two provinces alone.”

John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.

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