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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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