This is despite borrowing recently decelerating to its slowest pace since the beginning of the pandemic
Despite mortgage insurers generally reporting record lows in delinquency levels, market players said they are seeing growth in the number of borrowers who hold mortgages with loan-to-value ratios that are larger than 100% – in essence, loans that are greater than the updated value of the property in question.
For instance, Canada Guaranty Mortgage Insurance Co. saw its share of loans with 100%+ LTV ratios grow by at least six-fold on an annual basis, from $532 million at the end of 2021 to nearly $4 billion in Q4 2022. This sum accounted for around 5% of the company’s outstanding insurance for individual mortgages.
Other insurers like Sagen MI Canada Inc. and Canada Mortgage and Housing Corporation have also reported a doubling in the shares of their loans with elevated LTV ratios (higher than 95%, as these insurers do not provide data on 100%+ LTV ratios), even as the pace of borrowing has decelerated to its slowest pace since the beginning of the pandemic.
At the same time, Canada Guaranty assured that its delinquency rate was at a record low of 0.1% by the end of 2022.
“[Canada Guaranty has] proven processes in place to work with our lenders to keep borrowers in their homes,” senior vice president Mary Putnam told The Globe and Mail. “Canada Guaranty is well capitalized to withstand extremely severe macroeconomic scenarios, inclusive of additional capital for loans with higher loan-to-values.”
