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The number of Londoners falling behind on their mortgage payments edged up in the second half of 2024, tripling during the past two years and reaching delinquency rate levels not seen in the city since 2017.
The latest figures from Canada Mortgage and Housing Corp. (CMHC) show the city’s delinquency rate – when mortgages are more than 90 days past due – was 0.19 per cent in the third quarter of 2024.
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That’s up from the 0.06 per cent recorded in the same quarter of 2022, when interest rates reached historic lows, and right in between Ontario’s delinquency rate today of 0.18 per cent and Canada’s 0.20 per cent.
Despite the upward trend – which started around the time the Bank of Canada began raising interest rates in early 2022 amid high inflation – London’s figure remains low from a historical perspective, said Anthony Passarelli, CMHC’s lead economist for southern Ontario.
The highest figure included in the report, for instance, was recorded in the last quarter of 2012, when it reached a high point of 0.40 per cent. At the time, London’s unemployment rate hovered between 7.5 per cent and 10 per cent, Passarelli said.
Delinquency rates are “coming out of this extremely low delinquency period, which was partially a result of very low mortgage rates,” he said, referring to the delinquency rate levels seen during the COVID-19 pandemic years.
“That post-pandemic period also saw banks treat delinquencies differently, with a number of households also getting supplementary income from the government,” Passarelli said.
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“That was sort of an extraordinary period, so things are coming out of those lows, and they have been trending up.”
It’s still uncertain what kind of impact the recent cuts made by the Bank of Canada to its key lending rate – which impacts interest charged on mortgage loans – will have on delinquency rates.
After reaching a recent high of five per cent, Canada’s central bank began last year cutting interest rates as a way to boost a sluggish economy and stagnant labour market. The rate now sits at 3.25 per cent.
But CMHC estimates there are about 1.2 million home loans up for renewal this year, 85 per cent of which were signed when interest rates were at or below one per cent; that means some homeowners will still see their mortgage payments go up.
“Household debt remains a vulnerability for the Canadian economy,” the agency said in a recent report.
“Mortgage debt has grown faster than inflation. A large number of mortgages are up for renewal in 2025 and 2026, with many borrowers facing higher interest rates than when their terms began, potentially exacerbating financial pressures.”
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