TransUnion on what keeps rousing the Canadian mortgage market

Not even the ongoing global health emergency and the associated economic shutdowns have impeded the hunger for housing in Canada, with new data from TransUnion showing that Canadian mortgage originations increased by 25.8% annually as of the end of 2020.

In its latest Industry Insights Report, TransUnion said that this was largely impelled by the prevailing low-rate environment, along with an increased demand for refinancing.

“Because of intense real estate activity, home prices surged by 31.6% in March on an annual basis, with home sales up 76.2%,” TransUnion said.

The momentum imparted by this strength is likely to stimulate continuous growth through much of this year, with the caveat that there might be some “tapering off” after the second quarter due to lower demand.

The picture was not as rosy for other credit types, however. During Q4 2020, bank cards saw the largest annual decline in originations at 31.4%, followed by personal loans (down 27.1%), lines of credit (down 18.3%), and auto finance (down 8.8%).

This suggests that “consumers have adequate liquidity and do not feel the need to engage in the credit market,” TransUnion said, but emphasized that decreases in originations were seen across the risk spectrum, being especially pronounced among below-prime consumers.

“Origination volumes for below-prime consumers fell 27% from the prior year, while prime and better originations were down by 12%,” TransUnion added. “More than 30% of consumers who classified their credit as good to poor – out of a potential range of excellent to poor – considered applying for credit but ultimately did not. When asked about the reason for not applying, 29% reported they did not think they would meet income or employment conditions and 23% thought their credit history would be inadequate.”

MBN

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