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Big Banks Still Dominate Mortgage Market Share, Says CMHC

Big banks originate nearly 7 out of 10 (67%) of new Canadian mortgages, although their market share has fallen slightly from last year, according to CMHC.

Of total mortgages outstanding, the big banks hold 72% of those loans, down from 75% in 2018, according to the latest Residential Mortgage Industry Report released by the Canada Mortgage and Housing Corporation (CMHC).

Their average loan in 2019 was $220,650, with interest rates ranging from 3.10% to 5.20% and a delinquency rate of 0.24%.

Mortgage Finance Companies (MFCs) dominate the insured mortgage space after the larger lenders, holding 20% of the market, followed by 12% for credit unions.

Of total mortgages outstanding, MFCs have 9% of the market share, with average mortgage loans of $247,828 and a delinquency rate equal to that of the big banks at 0.24%.

Credit unions hold 14% of outstanding mortgages, with smaller loan amounts averaging $156,817 and a lower delinquency rate at 0.17%.

Private lenders and mortgage investment corporations (MICs) hold just 1% market share and reported average interest rates of between 7% and 15% with an average delinquency rate of 1.73%.

$1 Billion in Monthly Mortgage Deferrals

Canadian government COVID-19 initiativesCMHC also reported that Canadians have deferred a total of $1 billion per month since the height of the pandemic.

“This significantly reduces the influx of payments toward outstanding mortgage debt and is expected to contribute to increasing the total mortgage debt in the second and third quarters of 2020,” CMHC noted.

The calculation was made based on an average monthly payment of $1,333.

“…we also expect fewer mortgage borrowers will be making additional mortgage payments this year in order to accelerate their mortgage repayments (through lump-sum payments or accelerated repayments),” CMHC added.

About 20% of borrowers said they plan on making prepayments to their mortgage this year, based on data from the Financial Industry Research Monitor (FIRM). Last year, two thirds of mortgage borrowers said they planned to make extra payments towards their mortgage in 2020.

Additional Data from CMHC

  • About 760,000 borrowers from Canada’s chartered banks have deferred their mortgage payments.
  • 63% of all mortgages offered by the big banks were for uninsured loans.
  • “Renewals with the same lender increased by 11% relative to the previous year and accounted for more than half of all extended loans,” CMHC noted.
  • Up to 20% of borrowers said they “might be looking at switching lending institutions depending on whether their lender approved mortgage relief measures and how they dealt with accommodations during the crisis,” according to FIRM data.