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Canada Sees Surge in Uninsured Mortgage Debt

Canada Sees Surge in Uninsured Mortgage Debt
2 min. read

According to The Office of the Superintendent of Financial Institutions (OSFI), September brought a serious drop in the number of insured mortgages, which was felt by all of Canada’s Big Six banks. Meanwhile, debt coming from uninsured mortgages has significantly increased. Better Dwelling attributes this shift to mortgage stress tests. 

Overall, mortgage debt reached $1.119 trillion at Canada’s Big Six at the end of September 2017. On a year-over-year basis, this represents a 5.37% growth. But new regulations on insured mortgages, which require all borrowers to undergo a “stress test” to ensure that they can still deliver their payments if the mortgage rates increase up to 2%, have led to a sharp growth in uninsured debt. The Big Six’s $1.119 trillion make up 74.27% of the Bank of Canada’s total mortgage debt, a percentage which has remained unchanged from last year.

Over the past year, the number of uninsured mortgages significantly increased. On a year-over-year basis, the total of uninsured mortgages grew by 17.46%, standing at $611 billion in 2017. The Canadian Imperial Bank of Commerce (CIBC) experienced the biggest gains, with $115.7 billion in uninsured mortgage debt recorded at the end of the month, which marks a 34.85% y-o-y growth. The Bank of Montreal (BMO) recorded the smallest increase, 10.54%, which translates into $60.9 billion in mortgage debt.

Insured mortgages, on the other hand, have experienced a modest drop, with the total insured mortgage debt at the Bix Six standing at $508 billion. This represents a 6.24% drop on a y-o-y basis. The Canadian Imperial Bank of Commerce experienced the steepest decrease, by 9.61% to $90 billion. Meanwhile, changes recorded at the Royal Bank of Canada were the most insignificant, with its total insured mortgage debt remaining unchanged from September last year at $113 billion.


While an increase in the number of uninsured mortgages could have posed a risk to bank revenues, this wasn’t the case as the gains recorded were enormous. The question now remains how the upcoming stress test, aimed at uninsured mortgages, will influence the Big Six.

Original article published by betterdwelling.com.

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