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Frank Tian

🏠 Canadian Mortgage Risk Update

Big 5 banks’ Q4 earnings reports are out.


Here is an update of the mortgage book. 👇


It is a very Rough estimate, as each bank reports different metrics.


🟦 Big 5 have $1.3 trillion in Canadian mortgages.


🟦 73%~ are Uninsured: $970~ billion CAD.


🟦 Uninsured has less than 5% with FICO<650.


🟦 Uninsured has less than 1% with low FICO / high LTV ratio (FICO<650 and LTV>75%).


🟦 1% of the total Uninsured is $10~ billion CAD.


🟦 15%~ of the total mortgage balance is Condo.


🟦 13%~ of the total mortgage balance is Investment.



🟧 Special notes of variable rate mortgages:


📌 Scotia provides variable rate with variable payment.


Its consumers with variable rate/variable payments have 36% more deposits vs. those with fixed rate.


It seems the extra financial cushion gave those consumers the confidence to choose variable rate/variable payment.


📌 For the variable rate with fixed payment,


The payment will reset at renewal or re-underwritten with 25 years amortization.


Hopefully the additional time would allow consumers who have reached trigger rates to grow their income.


Sources: banks’ earning reports.

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