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Survey of Non-Bank Mortgage Lenders, fourth quarter 2020

Released: 2021-06-02

Total value of outstanding residential mortgages holds steady

The total value of outstanding residential mortgages held by non-bank lenders was at relatively the same level in the fourth quarter of 2020 as in the third quarter (-0.2%), at $337.5 billion. The overall number of outstanding mortgages was also relatively unchanged (-0.2%), at 1,719,900. The average value of outstanding non-bank mortgages edged up to $196,261 from $196,077.

Uninsured mortgages, which represented 60.3% of the total outstanding non-bank mortgage value, edged up in value (+0.7%) to $203.6 billion and in number (+0.5%) to 1,138,507 in the fourth quarter. In comparison, the value of insured outstanding mortgages decreased 1.5% to $134.0 billion, while the number declined 1.6% to 581,393.

Chartered banks reported an increase of 4.5% (to $847.5 billion) in uninsured outstanding mortgages, while the value of insured outstanding mortgages held steady at $481.8 billion. Some non-bank lenders sold their residential mortgage portfolios to banks in the fourth quarter and stopped selling residential mortgages, contributing to the slower pace of growth for non-bank lenders.

In this release, non-bank lenders were divided into quartiles based on the total value of their outstanding mortgages to provide a more disaggregated picture of non-bank lenders. The smallest lenders were included in the first quartile and the largest ones in the fourth quartile.

Lenders in the first quartile had a total outstanding mortgage value of $560.3 million, while that of lenders in the fourth quartile was $319.6 billion—a range of $319.1 billion. This indicates that non-bank lenders can vary widely in the size of their mortgage portfolios.

While lenders in all quartiles held a higher value of uninsured outstanding mortgages than insured, the larger the lender, the more likely they were to hold a higher share of insured outstanding mortgages. Non-bank lenders in the fourth quartile had the largest proportion of insured to uninsured outstanding mortgages, with 40.7% of their total outstanding mortgage value being insured, while the other 59.3% was uninsured. Conversely, those in the first quartile had the lowest proportion of insured to uninsured outstanding mortgages (6.1% to 93.9%).

Chart 1  Chart 1: Proportion of insured and uninsured outstanding mortgage value to total outstanding mortgage value by quartile
Proportion of insured and uninsured outstanding mortgage value to total outstanding mortgage value by quartile

Non-banks report increase in residential mortgages extended in the fourth quarter

Canada's gross domestic product continued to grow in the fourth quarter of 2020, aided in part by the continued rise in housing investment and home resale activity.

The total value of residential mortgage loans extended by non-banks increased 2.5% to $57.6 billion in the fourth quarter. The total number of these mortgages edged up 0.7% to 232,096—42.7% higher compared with the fourth quarter of 2019. Housing prices rose at their fastest pace in over three years in the fourth quarter.

Mortgages extended in the fourth quarter represented 17.1% of the total value and 13.5% of the total number of outstanding residential mortgages held by non-banks.

The majority of mortgages extended in the fourth quarter were uninsured (61.4%). The value of insured mortgages extended decreased 2.4% to $22.2 billion, while the number fell 4.9% to 81,020. In contrast, uninsured mortgages extended increased in both value (+5.8% to $35.3 billion) and number (+3.9% to 151,076 mortgages).

The average value of uninsured mortgages extended increased by $4,214 to $233,759 in the fourth quarter, while the average value of insured mortgages extended increased from $267,698 in the third quarter to $274,515 in the fourth quarter.

Non-bank lenders in the third quartile (based on total outstanding mortgage value) extended mortgages with the highest average value, at $630,395 for insured mortgages and $303,764 for uninsured mortgages. In contrast, lenders in the fourth quartile extended insured mortgages with an average value of $270,014 and uninsured mortgages with an average value of $231,110. This means that those in the third quartile were more likely to lend higher-value mortgages to fewer customers, leading to a higher average value, while those in the fourth quartile were more likely to lend more mortgages at a lower value per mortgage.

Chart 2  Chart 2: Average value of mortgages extended by quartile, insured and uninsured
Average value of mortgages extended by quartile, insured and uninsured

Value and number of mortgages in arrears for over 90 days decrease

There were 3,819 residential non-bank mortgages in arrears for over 90 days in the fourth quarter, down 6.1% from the previous quarter. The total value of these mortgages decreased 1.8% to $922.3 million, while their average value went up from $230,917 to $241,499.

These mortgage loans represented 0.27% of the total value and 0.22% of the total number of outstanding non-bank mortgage loans at the end of the fourth quarter. Lenders in the first quartile had more mortgages in arrears for over 90 days as a percentage of their total outstanding mortgages, with 3.3% of their total outstanding mortgages in arrears for more than 90 days. Conversely, lenders in the fourth quartile had the lowest share of outstanding mortgages in arrears over 90 days—0.2%.

Two-thirds of the value of non-bank mortgages in arrears over 90 days was uninsured (66.0%), and their number was down 7.0% from the third quarter to 2,099 mortgages.

One-third of the mortgages in arrears over 90 days were insured (34.0%). Both the number (-5.0% to 1,720) and the value (-11.6% to $313.7 million) of insured mortgages in arrears were down in the fourth quarter.

With physical distancing measures and government relief measures still in place at the time of this release, the economic effects of the COVID-19 pandemic on mortgage lending are expected to continue into 2021.

Non-banks continue to defer fewer mortgage loans in the fourth quarter

For the third consecutive quarter, many non-bank lenders continued to offer their customers the option to defer their mortgage payments because of the COVID-19 pandemic. Non-bank lenders declared that the total value of deferred mortgages decreased by almost half (-46.3%), from $16.1 billion in the third quarter to $8.6 billion in the fourth quarter. The number of mortgages deferred declined 40.3% to 35,674. The average value of deferred mortgages decreased from $268,812 to $241,917.

Two-thirds of deferred mortgages were uninsured (71.6%) and were valued at $6.2 billion—down 44.1% from the third quarter. The number of uninsured mortgages deferred decreased 35.8% to 26,022.

One-third of deferred mortgages were insured. The value of these mortgages decreased 51.3% to $2.4 billion, while the number of insured mortgages deferred fell 49.8% to 9,652.

Lenders in all quartiles deferred more uninsured mortgages than insured mortgages. Lenders in the fourth quartile were more likely to offer mortgage deferrals, with a value of $8.4 billion for total deferred mortgages. In comparison, lenders in the first quartile were less likely to defer mortgage payments—their total value of deferred mortgages was $6.8 million.

Additionally, lenders in the fourth quartile deferred more insured mortgages than lenders in other quartiles, with 28.6% of deferred mortgages being insured and the other 71.4% being uninsured, while lenders in the first quartile deferred only uninsured mortgages.

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 third quarter 2020 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.

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 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; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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