Credit scores rise for mortgage holders
October 13, 2017
Even as the federal government plans to further tighten rules for mortgage lending, a new study shows average credit scores of Canadian mortgage holders continue to improve.
The Canada Mortgage and Housing Corp. (CMHC) study shows that 80.7 per cent of mortgages are held by borrowers with a ”very good” (credit score of 700 to 749) or “excellent” (750 or higher) credit score.
That’s up from 78.2 per cent in 2012, CMHC noted. Meanwhile, the percentage of mortgage holders with “fair” or “poor” credit scores is continuing to trend lower, reaching 10.2 per cent, down from 11.8 per cent five years ago.
A fair credit score is 600-659 while a poor credit rating is anything less than 599.
“Overall, mortgage holders tend to have better credit scores than other consumers,” the CMHC report noted.
“On the lower end of the spectrum, we find that 15.2 per cent of consumers without a mortgage had a poor or fair credit score in the first quarter of 2017, which is five percentage points higher than consumers with a mortgage.”
“The recently rising share of borrowers with high credit scores is welcome news for the mortgage insurance industry concerned with possible defaults due to overpriced properties and rising mortgage rates,” said Novak Jankovic, a former CMHC economist specializing in the housing markets and mortgage finance.
The CMHC’s survey also found that:
• Delinquency rates (where payments were more than 90 days in arrears) in Q4 2016—the most recent date for which data is available—were highest in New Brunswick (0.79 per cent) and Nova Scotia (0.75 per cent), and lowest in Ontario (0.19 per cent), B.C. (0.25 per cent) and Manitoba (0.35 per cent). Toronto and Vancouver had delinquency rates lower than the provincial averages at 0.12 per cent and 0.15 per cent, respectively.
• Edmonton and Calgary were the only cities that had mortgage holders with an average credit score of “very good” or “excellent” that was lower than the national average were Edmonton and Calgary, at 77.4 per cent and 79.6 per cent, respectively.