The first quarter of the year saw the highest level of debt interest payments since the end of 2014, taking up a majority of Canadians’ mortgage debt servicing.
According to a recent Better Dwelling analysis of Statistics Canada data, Canadian home owners paid $91.42 billion in mortgage debt payments during Q1 2019 alone, with more than half going ($51.89 billion) towards interest.
The total was 2.04% greater than the volume seen during the quarter prior, as well as 7.30% larger on an annual basis. The amount allocated to interest grew by 13.78% year-over-year.
“Households are paying record amounts on mortgages, but less is going to principal. The amount that went towards principal reached $39.53 billion in Q1 2019, down 0.39% from the previous quarter. The decline was so large, the principal contribution fell 0.17% year over year. Less principal paid down means carrying a larger balance, and more interest.”
Figures from StatsCan’s latest Survey of Financial Security showed that a steadily growing number of Canadian households are finding it difficult to service their debts, mortgages and non-mortgages alike.
Among those who held mortgages, around 4% missed or delayed their bills in 2018. Meanwhile, approximately 11% of those with no mortgages skipped or paid late their payments.
Numbers covering Q4 2016 showed that around 7% of households with debt-to-asset ratios (DTAs) of less than 25% had late or missed payments. For those with DTAs falling in the 25%-50% range, around 11.5% were delinquent in their debt servicing.
Those with DTAs greater than 50% had the greatest difficulty, with 16.1% of these households struggling with on-time payments. Most crucially, Canadian households are now labouring under considerably tighter conditions, as the average DTA nationwide has grown by 4.41% since then.