Average New Mortgage Size Surges 18% in Third Quarter: Equifax.jpg

Equifax Reports Average New Mortgage Size Surges 18%

Equifax reports that borrowers, on average, are taking out mortgages to the tune of $360,000 as of the 3rd quarter.

That’s an 18% hike compared to a year earlier and up 1.4% from the second quarter.

On the other hand, development in brand-new mortgage volume moderated to a speed of 7.7%, below the previous two quarters, which saw year-over-year growth above 20% compared to pre-pandemic durations.

While mortgage development seems to moderate, the more significant loan quantities might make homeowners more conscious of rates, where hikes are anticipated by the spring of 2022.

“Future interest rate movements will not only have an impact on consumers with variable interest rate products in the short term, but also could put pressure on some homebuyers with fixed interest mortgages in future years,” said Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada. “Consumers who took advantage of very low rates over the last 18 months on high-value mortgages may feel pressure at the end of their term when they have to renew their mortgage at a much higher rate.”

Total Consumer Debt is Rising

Overall consumer debt, consisting of mortgage and non-mortgage credit, topped $2.2 trillion, an increase of 7.8% from Q3 2021.  

Credit card costs saw an increase in the quarter, with the typical regular monthly cost up 3.9% compared to the pre-pandemic 3rd quarter in 2019, Equifax reported.

“Whether it’s pent-up consumer demand, lifting of travel restrictions or higher disposable incomes, Canadians are giving their credit cards a workout heading into the holidays,” Equifax said in its release.

Delinquencies Dropping

Even with these increasing debt levels, delinquency rates continue to fall.

Equifax reports that late loan payments by 90 days or more have fallen 28.5% since last year. Likewise, non-mortgage loans in financial obligations are down by 22.2%.

Federal government assistance offered throughout the pandemic has been partly accountable for keeping delinquency rates low. “We can likely expect a rise in delinquency in the coming months as government benefits came to an end in October for most consumers,” Oakes noted.

The only age group to have seen an increase in non-mortgage delinquency rates remained in the 18 to 25 classification, with a delinquency rate of 1.05%, up 8% from a year earlier.

Ian Clark

Ian Clark is a graduate of The College of The North Atlantic's School of Business and is a Mortgage Broker with East Coast Mortgage Brokers. Prior to ECMB, Ian was brokering with Mortgage Alliance Provincial Mortgage Group. Ian is also an active member of Mortgage Professionals Canada, Canadian Mortgage Brokers Association, Canadian Progress Club and the Mount Pearl Paradise Chamber of Commerce.