Alberta housing bill delinquency at its highest rate in six years

The number of delinquent mortgage payments in Alberta has reached its highest point since 2013, according to a new analysis by the Canadian Bankers Association.

Collating residential loans data from the Big Six banks and other major institutions, the CBA reported that creeping unemployment was largely responsible for Alberta’s mortgage arrears rate touching 0.49% in February, the most recently recorded month.

“The continued slowdown in Alberta’s oil and gas sector and its associated impact on employment is one of the main drivers behind the uptick in arrears,” the association told CBC News.

Prior to February, gradual increases in the province’s arrears rate have been observed in the preceding 10 months, CBA added.

To compare, the rate for the rest of Canada has been moving downward during the same time frame, yielding 0.24% in February.

CMHC data indicated that mortgage arrears are considerably higher with products from non-traditional sources. Most notably, mortgage investment entities, which together have a delinquency rate of 1.93% across Canada – approximately eight times larger than that seen among traditional banks (0.24%) during Q3 2018.

Mortgage finance companies posted 0.25% delinquency, while credit unions exhibited the lowest rate at 0.17%.

The CBA emphasized, however, that the Alberta figures should be interpreted as a “lagging indicator” that might not accurately represent the actual market situation at present.

“Given that our latest stats are as of February 2019, that would mean it would be reflective of what was happening in the Albertan economy in the second half of 2018,” the CBA said.

“Recall that in Alberta, the unemployment rate increased from 6.3% in May 2018, to 7.2% in October 2018, which explains the uptick in mortgages in arrears in the latter half of 2018.”

 

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