First National Financial LP

Residential Market Commentary - Light at the end of the COVID tunnel

  • First National Financial LP

As we mark the first anniversary of COVID-19 becoming the centre of our universe there is a mood of genuine optimism.  Vaccines are rolling-out, case numbers are dropping and the economic toll has not been as harsh as originally feared. 

The latest employment numbers show a nice rebound with 259,000 jobs created in February.  Many of those jobs are in sectors that were hardest hit by pandemic lockdowns.

The dire consequences that were predicted for the housing market have also not been realized.  Home sales and home prices have been shattering records.  Housing starts are up.  Moreover, homebuyers appear to be on very sound financial footing and they also appear to be focusing on their mortgages.

In its latest Industry Insights Report, credit tracking firm TransUnion indicates many consumers are deleveraging.  New originations of unsecured credit are mostly down.  Personal lines of credit plunged 37%, credit cards dropped 35% and personal loans were 18% lower in the 4th quarter, on a year-over-year basis.  At the same time mortgage credit grew 5.6%, while the average balance of mortgage loans outstanding rose 5.7% to $293,000.

Further, TransUnion data shows delinquency rates dropped compared to a year earlier, despite the winding down of payment deferral programs.  Non-mortgage delinquencies fell more than 28% y-o-y. 

The Canadian Bankers Association reports just 0.22% of residential mortgages were in arrears in Q4 of 2020.