Canada's mortgage book improving

New CMHC data revealing the improved quality of Canada’s mortgage book may encourage brokers to tell both Jim Flaherty and Julie Dickson “I told you so” for even suggesting further tightening.

“As of June 2013, 0.31 per cent of residential mortgages were three or more months in arrears, compared to 0.33 per cent twelve months earlier,” CMHC’s yearly Canadian Housing Observer report states. “Canada’s internationally recognized conservative mortgage lending practices are among the key factors contributing to this outcome.”

Canadians’ improving mortgage habits are attributed to the various rule changes implemented by OSFI and the Canadian government in 2012, including shortening the maximum amortization period and reducing the maximum loan-to-value ratio on home equity lines of credit, according to the report.

The CMHC’s 184 pager deeply delves into a plethora of housing market topics, such as Canada’s condominium market, housing finance, a breakdown of housing markets, affordability and sustainable housing.

In terms of home financing, Canadian mortgage holders, as a whole, are making larger prepayments in a bid to pay off their mortgages sooner.

“About 31 per cent of recent buyers reported making a lump-sum payment and/or increasing their regular mortgage payment in 2012 in order to pay off their mortgage sooner and 44 per cent had their payment set above the minimum,” the report continues.

And although the amount of outstanding mortgage credit has increased year-over-year, the annual growth of outstanding credit was cut almost in half this year over last.

“Total residential mortgage credit outstanding stood at $1.172 trillion in April 2013, up 5.2 per cent compared to a year earlier,” according to the report. “This was below the average annual growth rate of 9.3 per cent from 2001-2010, reflecting a moderation in housing market activity levels.”