Mortgage Defaults Alberta
New statistics from the Canadian Bankers Association suggest more people in Alberta are struggling to pay their mortgages. Alberta has suffered the same in March 1983.It is all about the oil and gas.
If Oil and gas prices are high, the economy booms like a wild fire. But when the Oil and gas prices crash, it intends to bust the Real Estate market. During the boom many homeowners jumped into high price homes with low down payment. Since the prices have dropped, there is lot of underwater properties in Alberta.
"The numbers of Canadians who are unable to make mortgage payments are 18,371 which is 0.45 per cent of mortgage holders from major Canadian lenders as per Canadian Bankers Association. In Alberta the number of defaults is 4,212 which is 0.83 per cent of mortgage holders in Alberta.
They were unable to make payment for three months or more. An increase from the beginning of 2007 when 0.17 per cent of mortgages were in arrears. The situation is worse in Alberta than the rest of the country, where, historically, default rates average 0.45 per cent. In the United States, by way of comparison, close to 8 per cent of all mortgage holders are late on their payments says Navtaj Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada.
Genworth the country’s second-largest mortgage insurer after Canada Mortgage and Housing Corp., acknowledge that they are dealing with higher delinquencies in Alberta. The delinquency rate in its Alberta mortgage insurance portfolio was 0.59 per cent at March 31, compared to 0.18 per cent in Ontario, 0.31 per cent in B.C. and 0.27 per cent nationally.
While other provinces were able to recover as the recession eased, Alberta’s economy is back on track due to higher oil prices, disturbance in the Middle East. Calgary’s unemployment rate of 6.3 per cent is higher than the rest of Alberta at 5.7 per cent. A growing number of homeowners in Calgary are struggling to meet their mortgage payments as Calgary suffers a six-year real estate declining prices.
When the recession hit in 2008, oil prices plunged from $140/barrel to $35/barrel, the panicked homeowners rushed to sell in near-record numbers, flooding the market with inventory and putting renewed pressure on prices.
The Canadian Association of Accredited Mortgage Professionals found that 84 per cent of homeowners could afford at least another $300 increase in their monthly payments before falling behind. There is more than $1-trillion of mortgages outstanding in Canada, meaning even a small default rate has implications for the broader economy. When interest rates interest rates climb higher, and that will put even more people behind the financial eight ball.
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