Survey of Non-Bank Mortgage Lenders, third quarter 2021
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Released: 2022-03-02
After home sales reached historic peaks in the first half of 2021, residential mortgage activity eased up in the third quarter of 2021. This deceleration was reflected by a reduction in the value and number of mortgages extended by non-bank lenders. However, many housing market indicators, including the value of mortgages extended by non-bank lenders, remained at levels never seen before 2020. In the third quarter of 2021, the value of outstanding residential mortgages (see the definition in the Note to readers) held by Canadian non-bank mortgage lenders reached $350.5 billion, its highest value since the first iteration of this survey, which collected data for the second quarter of 2019. In comparison, the total value of outstanding residential mortgages held by chartered banks was $1.4 trillion.
Non-banks report decrease in the value of residential mortgages extended in the third quarter
Canadian non-bank mortgage lenders extended $59.7 billion in residential mortgages in the third quarter of 2021, a decrease of 17.2% relative to the $72.1 billion extended in the second quarter of 2021. The number of mortgages extended fell by 19.1% from the second quarter to the third quarter of 2021 and by 1.0% compared with the third quarter of 2020. Despite these declines, the value of mortgages extended in the third quarter of 2021 is the second highest value recorded by the Survey of Non-Bank Mortgage Lenders, which has been running since the second quarter of 2019.
These fluctuations are broadly consistent with the trends observed among certain housing market indicators throughout the third quarter of 2021. While the Canadian Real Estate Association reported a slowdown in home sales in July and August 2021, the numbers of home sales were still the second highest ever for those two months. From July to September 2021, Statistics Canada's New Housing Price Index (NHPI) also registered smaller monthly increases than those observed in the first half of 2021, but it nevertheless reached its highest value ever in September 2021.
Both uninsured (-18.5%) and insured (-14.9%) mortgages extended registered quarterly declines in value in the third quarter, driven primarily by credit unions. Credit unions saw a 26.3% decrease in the value of uninsured mortgages extended, and a 27.5% decline in the value of insured mortgages extended, while other non-bank lenders registered declines of 6.1% in the value of uninsured mortgages extended, and 10.0% in the value of insured mortgages extended. Quarterly fluctuations in mortgages extended are in part attributable to seasonal variations in mortgage activity.
Total value of outstanding residential mortgages continues to grow
From the second quarter to the third quarter of 2021, the value of residential mortgages held by Canadian non-bank mortgage lenders increased by $3.8 billion (+1.1%). In fact, the value of outstanding mortgages has grown in 7 of the 10 quarters recorded since the inception of the survey. This was driven by the growth in outstanding uninsured mortgages: from the second quarter of 2019 to the third quarter of 2021, the value and the number of uninsured mortgages grew in most quarters, increasing by a total of 19.6% and 8.6%, respectively. In contrast, the value and number of outstanding insured mortgages decreased in most quarters during that same period, and declined by a total of 8.2% and 10.7%, respectively.
Chartered banks' residential mortgage holdings trended in the same directions, with the value of outstanding uninsured mortgages increasing by 39.6% and that of outstanding insured mortgages decreasing by 3.6% from the second quarter of 2019 to the third quarter of 2021.
Chart 1
Value of mortgages extended by quarter, insured and uninsured
The share of mortgages in arrears over 90 days remains unchanged
Chart 2
Percent share of residential mortgages over 90 days in arrears out of the total number of outstanding mortgages
The proportion of mortgages in arrears for over 90 days out of the total number of outstanding mortgages registered an increase in the second quarter of 2020, before falling in nearly every subsequent quarter. In the third quarter of 2021, the proportion of mortgages in arrears for over 90 days out of the total number of outstanding mortgages held by non-bank lenders remained relatively stable at 17 basis points, its lowest level since data from the survey became available.
This share is consistent with the 18 basis points reported for chartered banks by the Canadian Bankers Association (CBA) at the end of September 2021. This is the lowest share of mortgages in arrears over 90 days reported by the CBA series on the number of residential mortgages in arrears, which begins in January 1990.
For more information on housing statistics, visit the Housing Statistics portal.
Note to readers
The Survey of Non-Bank Mortgage Lenders is a recent initiative to collect information at the national level. This initiative will help complete the overall picture of the residential mortgage market in Canada. Until recently, residential mortgage data from non-bank lenders were collected only by some organizations at the provincial level, for certain industries, and at varying levels of detail.
The survey covers non-bank residential mortgage lenders, such as local credit unions, mortgage finance companies, trusts, insurance companies, mortgage investment corporations and private lenders. The entities included are not only those that issue residential mortgages, but also those that purchase them.
Please refer to the Survey of Non-Bank Mortgage Lenders, second quarter 2021 release for quarterly comparisons.
Some figures may not add up to 100% as a result of rounding.
Data are not seasonally adjusted.
Please note that no imputation was performed on the data in Table 2. This information should be associated with Table 1 with caution.
The data from the second quarter of 2019 to the third quarter of 2021 are available by request.
Definitions
Outstanding mortgages are the mortgage balances remaining on the lender's balance sheet as of the end of the quarter.
Mortgages extended are the mortgages approved, issued and added to the balance sheet during the quarter.
Mortgages in arrears are mortgage loans with payments overdue at the end of the quarter.
Mortgages deferred are mortgages for which an agreement is in place between the lender and the borrower to pause or suspend a borrower's mortgage payments and other accommodations for a specified period of time. Statistics Canada began to collect data on deferred residential mortgages in the second quarter of 2020.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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