Amid rock-bottom interest rates, an economic rebound and a robust housing market, lending by non-banks surged in the third quarter of 2020, according to new data from Statistics Canada.
StatsCan reported that the number of mortgage loans provided by non-bank lenders in Q3 was up by 40.7% from the same quarter in 2019. During the same period, the total value of their mortgage lending rose by 17.2% to $56.2 billion.
The mortgage growth was likely driven by a number of factors, it said, citing “low mortgage rates, improved job market conditions in the third quarter and a resumption in home resale activity.”
The agency said housing investment experienced a record increase in Q3, and the price of new homes jumped the most in 14 years in the quarter.
Most of the new mortgage activity in Q3 was uninsured (63.1%), as both the number and value of uninsured mortgages grew faster than insured mortgages.
The value of uninsured mortgages rose by 20.9% to $33.4 billion, and the value of insured mortgages was up 12.2% to $22.8 billion, StatsCan reported.
Alongside the growth in lending, the report noted that both the number of residential mortgage deferrals and the number of mortgages in arrears for over 90 days decreased in the third quarter.
While many non-bank lenders offered the option of mortgage deferrals in the third quarter, the proportion of customers taking them up on it dropped by 40.4% from the second quarter, and the value of deferred mortgages declined by 36.8% to $16.1 billion, StatsCan reported.
Additionally, the number of mortgages more than 90 days overdue in Q3 declined by 7.4% from the second quarter, and the value of mortgages in arrears decreased by 12.9% to $939.6 million, it said.
In Q3, the total value of outstanding mortgages from non-bank lenders increased by 2.1% to $338.1 billion. By comparison, bank-issued mortgages rose 2.4% to $1.4 trillion in the third quarter, the report noted.