Alberta’s mortgage arrears rate reaches highest point since 2013

In comparison, the average arrears rate for the rest of Canada has been shrinking

Alberta’s mortgage arrears rate reaches highest point since 2013

Creeping unemployment has pushed Alberta’s proportion of mortgages in arrears to their highest levels since early 2013, according to latest figures from the Canadian Bankers Association.

The analysis brought together residential loans data from the Big Six banks and other leading institutions like Manulife and Laurentian.

As of February (the most recently recorded month), the province’s rate of mortgages in arrears stood at 0.49%. Gradual increases in this share have been observed in the 10 months prior, CBA said.

In stark contrast, the rate for the rest of Canada has been on a downward trend, ending up at 0.24% in February.

“The continued slowdown in Alberta’s oil and gas sector and its associated impact on employment is one of the main drivers behind the uptick in arrears,” the association told CBC News.

However, the numbers should be seen as a “lagging indicator” that might not be fully reflective of the actual situation on the ground.

“Given that our latest stats are as of February 2019, that would mean it would be reflective of what was happening in the Albertan economy in the second half of 2018,” the CBA emphasized.

“Recall that in Alberta, the unemployment rate increased from 6.3% in May 2018, to 7.2% in October 2018, which explains the uptick in mortgages in arrears in the latter half of 2018.”

Grant Thornton LLP licensed insolvency trustee Freida Richer stated that the CBA’s findings are a generally accurate representation of her clients’ plight. She added that based on transactions, many of her clients had to contend with divorce and job losses.

“Although we’ve been on this road of economic recovery now for almost two years, I can tell you that from my discussions with a lot of hardworking Albertans, there was a continued sentiment that their households are still struggling and they're simply not able to recover as quickly as they had thought or hoped,” Richer noted.