Wednesday, November 18, 2009


Yesterday the CBA released the September mortgage arrears figures and... cue the broken record... they're up. The Alberta rate now stands at 0.67%, drawing ever closer to our record high (0.69%), up from 0.34% a year earlier and 0.65% in August.

Nationally the rate held at 0.43%, and Manitoba swapped places with Saskatchewan for the lowest rate in the country (0.26% and 0.28% respectively). Alberta continues to widen it's lead at the opposite end of the spectrum, while the Atlantic provinces are next worst at 0.49%. B.C. and Quebec were both up a tick at 0.37% and 0.36% respectively, and finally Ontario held at 0.43%.

Mortgage Arrears - Alberta
In an effort to freshen things up, I did some digging and found some comparable numbers from the US. These are from Fannie Mae and Freddie Mac (I'm sure you've heard those names, they operate something like the CMHC does in Canada for those unfamiliar with them).

These graphs are of their "serious delinquencies," which are those that fall three months or more behind on their mortgages... so, virtually exactly the same as our much discussed "mortgage arrears." They have three different figures respectively, credit enhanced, non-credit enhanced, and total.

Freddie Mac - Serious Delinquencies
Fannie Mae - Serious Delinquencies
Afraid I'm not intimately familiar with exactly where the line is between credit enhanced and non, or how these relates to the CBA figures (I think we can safely assume from the data 'credit enhanced' are likely those with less then stellar credit ratings) ... so for our comparisons between countries I'll include both the total and non-credit enhanced figures and let you interpret the data for yourself.

Mortgage Arrears - US vs Canada
Here we have them all charted together. We can see that traditionally non-credit enhanced US figures are very close to those we enjoy here in Canada and Alberta, while the total figures track about a half point higher (at least until their bubble burst).

While the national numbers are only starting to creep up here in Canada, the Alberta figures are tracking a pattern quite similar to those in the US 18 months earlier. Now, that doesn't mean we'll end up as bad off as they are down south, but it's worth noting the similarities... so it's not out of the question that we could be on the same road. It was also around that time that phrases like "foreclosure epidemic" really started to make the rounds.

Bear in mind, these are national numbers in the US, and foreclosure problems vary greatly amongst regions/states. I'm going to try to find some state numbers for future months... but looking at the magnitude of the change in the US as a whole leaves little doubt that foreclosures have become a national issue.

Mortgage Arrears - US vs Canada
Fannie and Freddie have changed what they've reported periodically, so the best I could piece together for a longer term comparison is their total figures. It's interesting to note here their total delinquency figures were quite close to the Canadian equivalent up until '01-'02. Why and how it's difficult to say, could be anything from a change in lending practises, to a change in methodology.

In any case, what I think we should take away from this is that before we get cocky about how low our level is currently in comparison, remember, it was not even two years ago they were right where we are now... and we've had a ringside seat to witness that slippery slope.