RBC has observed a notable uptick in mortgage delinquencies, particularly within the Greater Toronto Area (GTA), signaling emerging financial stress among homeowners. In its second-quarter earnings report, the bank revealed that the 90-day mortgage delinquency rate rose to 0.30%, up from 0.28% in the first quarter and 0.19% in the same period the previous year. Notably, the GTA’s delinquency rate stands at 0.39%, surpassing the national average of 0.30% and indicating a more pronounced strain in this region .(canadianmortgagetrends.com)
This increase in delinquencies is attributed to several factors, including the ongoing impact of elevated interest rates, which have heightened borrowing costs for homeowners. RBC’s Chief Risk Officer, Graeme Hepworth, emphasized that while the bank’s overall mortgage portfolio remains robust, certain markets, especially the GTA, are experiencing more significant challenges due to these higher payment environments .(canadianmortgagetrends.com)
Further compounding these issues is the impending “mortgage cliff,” where a substantial number of homeowners who secured low-interest rates during the pandemic are now facing renewals at significantly higher rates. The Canada Mortgage and Housing Corporation (CMHC) projects that over 1.2 million Canadians will renew their fixed-rate mortgages in 2025, with many experiencing monthly payment increases of up to 30% .(reic.ca, globalnews.ca)
Additionally, the broader economic context, including rising unemployment and increased non-mortgage debt delinquencies, further strains household finances. The Real Estate Institute of Canada notes that the national mortgage delinquency rate has climbed to 0.20%, up from 0.14% in 2022, with Toronto’s rate doubling to 0.16%, the highest since 2015 .(mpamag.com, reic.ca)
Despite these challenges, RBC maintains that the overall quality of its mortgage portfolio remains strong, with nearly two-thirds of clients holding credit scores above 785 and a significant portion having low loan-to-value ratios. However, the bank continues to monitor the situation closely, especially in high-risk segments like high-rise condominiums and commercial real estate .
In summary, while RBC’s mortgage portfolio is currently experiencing increased delinquencies, particularly in the GTA, the bank’s proactive monitoring and conservative underwriting practices aim to mitigate potential risks. Nevertheless, the combination of higher interest rates, upcoming mortgage renewals, and broader economic pressures suggests that the coming months may present continued challenges for homeowners and lenders alike.