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Missed mortgage, credit payments in Canada hit pre-COVID highs

In the first quarter of 2024, Canadian households faced increasing financial pressure, with missed mortgage and credit payments returning to levels not seen since before the COVID-19 pandemic. According to Equifax Canada, over 34,000 Canadians missed a mortgage payment, a 23% rise from the same period in 2023. Additionally, more than 1.26 million Canadians missed some form of credit payment, marking a 12.2% increase year-over-year.

Rebecca Oakes, Equifax Canada's Vice-President of Advanced Analytics, highlighted that economic challenges since the pandemic have led Canadians to extend mortgage terms to reduce monthly payments. However, this strain is felt by both homeowners and renters due to the high cost of living.

Oakes noted that the Bank of Canada's recent 25 basis point interest rate cut might not significantly ease financial burdens. She suggested a full percentage point reduction might be needed to make a meaningful difference for individuals.

The financial stress is uneven across Canada. Ontario, British Columbia, and Quebec saw "above-average jumps" in missed credit payments, ranging from 13% to 15%. Ontario, in particular, reported over $1 billion in severe mortgage delinquency, driven by soaring home prices.

Equifax's report mirrors other findings showing high prices and ongoing financial stress are affecting the housing market and large purchases. New mortgages hit an all-time low in Q1 2024, with a year-over-year drop in both mortgage refinancing (down 2.6%) and first-time home buyer volumes (down 10%).

Interestingly, Alberta saw a 10.6% rise in new mortgage originations, suggesting people are moving to more affordable areas. Oakes mentioned that a significant number of individuals have relocated from Ontario and British Columbia to Alberta, seeking more financially accessible living conditions.

As Canadians navigate these financial challenges, the impact on the housing market and overall economy continues to unfold.

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