Rising Credit Scores Mask A Divide
The COVID-19 pandemic has impacted the Canadian housing finance environment. We saw mortgage debt grow unevenly across Canada. Non-mortgage debt declined in all major census metropolitan areas between the last quarter of 2019 and the second quarter of 2020.
In the context of a negative economic shock, we would have expected a decline in the total number of mortgage borrowers. Instead, the total number of mortgage transactions averaged 276,401 in Canada over the last three quarters of 2020. This is up from 265,773 over the same period in 2019 and 231,064 in 2018.
Meanwhile, the average credit score of new mortgage holders has been trending upward. This is an indicator of how likely a consumer is to pay their bills on time. This average credit score rose from 770 in the last quarter of 2019 to 773 by December of 2020 (figure 1). This is the case in Canada’s largest metropolitan areas (figure 2).
