Mark Cashin

HIGHLIGHTS Renewal risk remains as 1.2 million mortgages will come up for renewal in 2025. Most of these will experience higher interest rates than when their term began: 85% of those were contracted when the Bank of Canada rate was at or below 1%. The mortgage delinquency rate continued to rise from historic low levels in 2024, reaching 0.19% in the second quarter, with delinquency rates on other credit products, and allowances for expected credit losses both suggesting it will continue to increase through 2025. However, this remains below pre-pandemic levels and well below averages since 1990. Traditional lenders experienced two very different quarters to begin 2024. The first quarter showed higher risk lending compared to 2023, but in the second quarter newly extended mortgages had lower risk based on traditional risk metrics. Overall mortgage debt increased to $2.2 trillion in July 2024, which exacerbates the vulnerability of elevated household debt. This growth (3.5% year-over-year) is below recent averages, but lower interest rates could accelerate the increase. Alternative lenders saw an increase in lending during the first quarter of this year compared to the fourth quarter of 2023, indicating renewed momentum to sustain their market share from a year ago. However, their risk profile has increased compared to last year. Mortgages with terms of three or more years but less than five years are the most popular, with over half of new mortgages having terms in this range. The traditional five-year, fixed-rate mortgage and variable rate mortgage both represent a small share of the newly extended loans. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report/2024/residential-mortgage-industry-report-fall-2024-en.pdf

The BMO Real Financial Progress Index reveals that amid growing concerns about the cost of living (54%) and their overall financial situation (36%) 79% of Canadians are planning to cut back on spending this holiday season. The surveys insights provide an outlook on Canadians holiday spending plans, including: The holiday price tag: On average, Canadians plan on spending more than $1,991 this holiday season, including travel ($1,802), holiday gifts ($519), entertaining ($295), decorations ($141) and other holiday expenses ($275). Nearly a quarter (23%) plan on spending more than $2,000 during the holidays. Making a list and checking it twice: 79% plan on buying fewer gifts this year, and over a quarter (27%) will cut down the number of people on their gift list. More than a third (36%) plan on buying less expensive gifts. Sleighing spending: 41% are spending less on fewer gifts, and 44% had cut back on spending on other occasions, including birthdays and anniversaries, throughout the year in order to spend more on holiday gifts. Nearly half (49%) admit to spending more than they know they should. https://about.bmo.com/consumers-plan-to-spend-less-this-holiday-season-heres-how-bmo-can-help-make-holiday-budgeting-easier/