Summary
The Bank of Canada uses loan-level data to assess household vulnerabilities related to the housing market. Since 2017, Bank staff have used a dataset from the Office of the Superintendent of Financial Institutions (OSFI) for this purpose. Recently, OSFI replaced this dataset with an enhanced version that includes details about the stock of residential mortgage loans and home equity lines of credit. The Bank is now using this new dataset to monitor risks to financial stability and the broader economy.
The new dataset allows the Bank to continuously monitor the stock of outstanding residential real estate secured loans held by federally regulated lenders. Analyzing this dataset, we find that:
- The demographic characteristics of borrowers appear to be stable over time, with similar distributions between the overall stock and mortgage originations made in 2024.
- As of September 2024, around 70% of outstanding mortgages have a current loan-to-value ratio of 65% or less.
- The median amount of principal owing on outstanding mortgages is $245,000.
- About 60% of outstanding mortgages will renew before the end of 2026. As well, about 40% of outstanding mortgages could be subject to a higher interest rate at renewal over the same period.
Introduction
The Bank of Canada uses loan-level data to assess vulnerabilities in the mortgage market. Canada’s banking regulator—the Office of the Superintendent of Financial Institutions (OSFI)—collects data on originations of real estate secured loans (RESL), with data available since January 2014. The originations dataset has been an important source of information for the Bank’s analysis.
Recently, OSFI decommissioned the originations dataset and replaced it with an enhanced dataset that tracks the stock of outstanding mortgages held by federally regulated lenders. In this paper, we highlight some of the changes in the new dataset and how they impact the Bank’s understanding of the mortgage market. We expect ongoing changes to the dataset, including historical revisions, as the quality of reported lender data continues to improve. More in-depth analysis using the new dataset is left for future work.
Making use of the enhanced dataset
The new dataset captures RESL loans made by federally regulated financial institutions such as banks and trust companies. It excludes loans made by credit unions and caisses populaires, which are provincially regulated, as well as mortgage investment companies, mortgage finance companies and other private lenders that are not regulated by OSFI.
The previous RESL dataset contained records from January 2014 to March 2024 (when it was decommissioned) and captured only the flow of new mortgages. This means it contained information on home purchases as well as mortgage refinancings and renewals in the month that they occurred. The dataset did not provide any information on a given loan between origination and renewal.
The new enhanced RESL dataset (RESL2) is a stock dataset that provides monthly updates on all outstanding mortgage and home equity line of credit (HELOC) loans held by lenders. It includes:
- loans that were purchased from another entity, such as a mortgage finance company1
- more small and medium-sized lenders than the previous originations dataset2
- the same loan records that would have been reported in the originations dataset, meaning loans that were originated or renewed in a prior month
Federally regulated lenders capture about 80% of the mortgage stock, by dollar value.3 As of September 2024, the RESL2 dataset has about six million mortgages with a total outstanding balance of Can$1.7 trillion.
RESL2 has data available since September 2021. OSFI has continued to improve the data collection in subsequent rounds of revision to the dataset thereby expanding what data are collected. The most recent revision to the collection of the data was in May 2023.4
The new loan-level dataset provides a more comprehensive view of the mortgage universe for OSFI-regulated lenders than the previous dataset. Observing all outstanding mortgage accounts over time improves the Bank’s ability to monitor borrower vulnerabilities. Specifically, it allows the Bank to better track:
- choice of term and interest rate type at renewal
- HELOC use
- combined mortgage and HELOC plan use5
- payment histories (e.g., regular obligated payments versus voluntary prepayments)
- borrowers who have multiple RESL products and how they use them over time
It also allows the Bank to study the risks from all outstanding mortgage holders, including risks to financial stability.
Examining the characteristics of outstanding mortgages
The Canadian mortgage market can be divided into two segments, based on the loan-to-value (LTV) ratio of the mortgage.
- High-ratio mortgages have an LTV ratio above 80%. These mortgages must be insured by federally regulated lenders. They are also subject to mortgage insurance underwriting rules that determine when a loan can be granted.
- Low-ratio mortgages have an LTV ratio of 80% or lower. They also have a more flexible set of approval metrics.
In the following sections, we analyze these two market segments separately. We do so by reviewing the characteristics captured in the latest available dataset on all outstanding mortgages as of September 2024, as well as all mortgage originations between January and September 2024, along various dimensions. This analysis captures standalone mortgages as well as mortgage components of combined mortgage and HELOC plans.
Demographic characteristics of mortgage holders
Ontario has the largest proportion of outstanding mortgages (Table 1). In both Ontario and British Columbia, the share of high-ratio mortgages is lower than low-ratio mortgages, which do not have a price cap on eligible mortgage loans.6 As well, the shares of low-ratio mortgages across regions are nearly the same between the stock of outstanding mortgages in September 2024 and originations between January and September 2024 (Table 2).
We find that high-ratio mortgage holders tend to be younger than their low-ratio counterparts in both the stock and flow of originations. This is not surprising because younger borrowers usually have a smaller down payment available to enter the housing market. The finding is also consistent with previous Bank analyses using the RESL origination dataset.7
As expected, mortgage holders tend to have higher incomes than the general Canadian population.8 Only 4% of borrowers are in the lowest income quintile, as calculated using the pre-tax income of Canadian households. However, borrowers with a pre-tax income in the three lowest quintiles make up a large share of borrowers with an LTV ratio of 65% or below. These households include some with a high net worth but a low income such as retirees. Borrowers who took out a low-ratio mortgage with an LTV ratio above 65% tend to have higher incomes than high-ratio borrowers.
Table 1: Demographic characteristics of mortgage borrowers in the stock of outstanding mortgages
| % of all mortgages | % of all high-ratio mortgages (LTV > 80%) | % of all low-ratio mortgages (LTV <= 80%) | % of mortgages with LTV = 80% | % of mortgages with LTV above 65% but below 80% | % of mortgages with LTV = 65% | % of mortgages with LTV below 65% | |
|---|---|---|---|---|---|---|---|
| By region | |||||||
| British Columbia | 14% | 8% | 15% | 12% | 15% | 21% | 19% |
| Ontario | 44% | 27% | 48% | 43% | 47% | 51% | 53% |
| Quebec | 17% | 19% | 17% | 19% | 18% | 14% | 15% |
| Prairies | 17% | 33% | 14% | 18% | 15% | 10% | 9% |
| Rest of Canada | 7% | 13% | 6% | 7% | 6% | 4% | 4% |
| By current age of mortgage holder | |||||||
| Younger than 35 years | 12% | 22% | 10% | 13% | 9% | 8% | 6% |
| 35 to 44 years | 26% | 34% | 24% | 29% | 25% | 20% | 18% |
| 45 to 54 years | 27% | 23% | 28% | 28% | 29% | 28% | 27% |
| 55 to 64 years | 22% | 14% | 24% | 20% | 23% | 27% | 28% |
| 65 years or older | 14% | 7% | 15% | 10% | 14% | 17% | 22% |
| By age of mortgage holder at origination | |||||||
| Younger than 35 years | 23% | 45% | 18% | 25% | 18% | 15% | 11% |
| 35 to 44 years | 29% | 30% | 29% | 32% | 31% | 26% | 24% |
| 45 to 54 years | 26% | 16% | 28% | 26% | 28% | 30% | 29% |
| 55 to 64 years | 16% | 7% | 18% | 14% | 17% | 20% | 23% |
| 65 years or older | 7% | 2% | 8% | 4% | 6% | 8% | 12% |
Notes: Loans are categorized in the table using the loan-to-value (LTV) ratio at origination. For combined mortgage and home equity line of credit plans, a combined LTV ratio is used. Column sections may not add up to 100 due to rounding.
Sources: Regulatory filings of Canadian banks and Bank of Canada calculations
Table 2: Demographic characteristics of mortgage borrowers in originations
| % of all mortgages | % of all high-ratio mortgages (LTV > 80%) | % of all low-ratio mortgages (LTV <= 80%) | % of mortgages with LTV = 80% | % of mortgages with LTV above 65% but below 80% | % of mortgages with LTV = 65% | % of mortgages with LTV below 65% | |
|---|---|---|---|---|---|---|---|
| By region | |||||||
| British Columbia | 13% | 8% | 14% | 11% | 13% | 17% | 16% |
| Ontario | 43% | 26% | 45% | 43% | 43% | 48% | 48% |
| Quebec | 20% | 21% | 20% | 20% | 22% | 18% | 21% |
| Prairies | 17% | 32% | 15% | 20% | 16% | 12% | 10% |
| Rest of Canada | 7% | 12% | 6% | 6% | 7% | 5% | 5% |
| By age of mortgage holder at origination | |||||||
| Younger than 35 years | 22% | 48% | 19% | 26% | 20% | 14% | 12% |
| 35 to 44 years | 29% | 31% | 29% | 33% | 32% | 26% | 24% |
| 45 to 54 years | 25% | 14% | 26% | 24% | 27% | 28% | 28% |
| 55 to 64 years | 16% | 6% | 17% | 13% | 16% | 22% | 23% |
| 65 years or older | 7% | 2% | 8% | 4% | 6% | 10% | 13% |
| By income* | |||||||
| 1st income quintile | 4% | 1% | 4% | 2% | 3% | 8% | 8% |
| 2nd income quintile | 10% | 9% | 11% | 6% | 9% | 10% | 17% |
| 3rd income quintile | 21% | 24% | 21% | 17% | 21% | 17% | 25% |
| 4th income quintile | 31% | 40% | 30% | 32% | 32% | 24% | 27% |
| 5th income quintile | 34% | 26% | 35% | 43% | 35% | 40% | 24% |
*The thresholds for the income quintiles were estimated using total income levels reported by Statistics Canada in the 2021 Census of Population and income dynamics observed in data from Statistics Canada, “Table 36-10-0587-01 Distributions of household economic accounts, income, consumption and saving, by characteristic, annual.” Incomes reported in the regulatory filings of Canadian banks include the incomes of guarantors and co-borrowers, if applicable.
Notes: Loans are categorized in the table using the loan-to-value (LTV) ratio at origination. For combined mortgage and home equity line of credit plans, a combined LTV ratio is used. Column sections may not add up to 100 due to rounding.
Sources: Regulatory filings of Canadian banks and Bank of Canada calculations
Amortization
Close to half of current outstanding mortgages have an effective amortization of more than 20 years.9 Typically, mortgages have a contractual amortization of 25 or 30 years at origination, and this is true for mortgages originated in 2024 and for the stock of mortgages as of September 2024 (Chart 1).
We find that about 70% of outstanding mortgages were originated since 2019, and a further 10% originated in 2017 and 2018. Several factors could explain the large share of loans originating in recent years, including:
- borrowers refinancing their mortgages and thereby resetting their origination dates
- borrowers selling their home to move or repay their mortgages
- borrowers repaying their mortgage faster than initially expected
With the enhanced dataset, we can also see if a borrower’s mortgage payment does not sufficiently cover the interest, causing the unpaid amount to be added to the total amount owed. This situation, known as negative amortization, can occur to variable-rate mortgages with a fixed-payment schedule in an environment of rising interest rates. Previously, the Bank had to estimate the share of mortgages that were in negative amortization by using information on mortgage contracts, which did not account for prepayments or other changes to the loan.10 As of September 2024, around 12% of variable-rate mortgages with fixed payments—or 2% of all mortgages—were in negative amortization (Chart 1).
Chart 1: Share of mortgages by amortization period
Loan-to-value ratio
The LTV ratio captures the initial equity stake a homebuyer has in their home by comparing the size of the mortgage to the property’s market value. The smaller the down payment made by the homebuyer relative to the purchase price, the higher the LTV ratio. For a mortgage that is part of a combined mortgage and HELOC plan, this ratio also captures any unused credit limits available on the HELOC component of the plan. Having an 80% LTV is most common when originating a mortgage.
The distribution of LTV ratios at origination has not changed much over time, since it is quite similar for new and existing loans (Chart 2). However, the distribution of current LTV ratios is relatively low in the stock, with 70% of all outstanding mortgages having an LTV ratio of 65% or less. This is due to a mix of homeowners having paid down more of their principals and, for some, having seen their property values increase.11
Chart 2: Share of mortgages by loan-to-value ratio
Balances and appraisal value
The median outstanding principal balance is $245,000 for the stock of mortgages as of September 2024 and $344,000 for originations between January and September 2024 (Chart 3). This difference partly reflects borrowers having paid down the principal. However, it also reflects that, on average, more recent borrowers have taken out larger mortgages, partly reflecting higher home prices. This is best illustrated by the median appraised value of homes reported when the mortgages originated: $485,000 in the stock compared with $600,000 for originations in 2024.
Chart 3: Share of mortgages by outstanding balances
Mortgage type
Fixed-rate mortgages are the most popular mortgage product, representing around 80% of all outstanding mortgages (close to 90% for high-ratio borrowers). While most high-ratio mortgage holders have a five-year, fixed-rate mortgage, borrowers with recent originations have favoured short-term, fixed-rate mortgages slightly more (Table 3). This shift in preferences toward shorter-term, fixed-rate products is even more apparent among low-ratio borrowers, representing 74% of originations in 2024, which is more than the 40% in the stock.
Table 3: Mortgage products by type of interest rate and term
| Term and rate type | % of all mortgages | % of high-ratio mortgages (LTV > 80%) | % of low-ratio mortgages (LTV <= 80%) |
|---|---|---|---|
| Stock as of September 2024 | |||
| Fixed rate, term of less than 5 years | 38% | 28% | 40% |
| Fixed rate, term of 5 years or more | 42% | 60% | 38% |
| Variable rate, all terms | 20% | 12% | 22% |
| Originations from January to September 2024 | |||
| Fixed rate, term of less than 5 years | 71% | 50% | 74% |
| Fixed rate, term of 5 years or more | 19% | 46% | 16% |
| Variable rate, all terms | 10% | 4% | 10% |
Notes: Loans are categorized in the table using the loan-to-value (LTV) ratio at origination. For combined mortgage and home equity lines of credit plans, a combined LTV ratio is used.
Sources: Regulatory filings of Canadian banks and Bank of Canada calculations
Stock data improve tracking of renewal cohorts
An important question for policy-makers has been how mortgage holders would adapt to higher interest rates.12 With the previous originations dataset, the Bank had to assume that borrowers made only scheduled payments on their mortgages, and tracking borrowers who renewed early or switched lenders was not always possible. The enhanced dataset gives a clearer picture on both of these issues for the current stock of mortgages.
We find that about 60% of outstanding mortgages will renew before the end of 2026. Assuming that interest rates evolve according to financial market expectations, we estimate that approximately 60% of mortgages in this group—or about 40% of all outstanding mortgages—will renew at a higher interest rate over the same period.
The largest share of mortgage holders renewing in 2025 and 2026 hold five-year fixed-rate mortgages (Chart 4). These borrowers initially took out their loans when interest rates were near their trough, and some will be facing a large payment shock. However, these borrowers will have some additional flexibility when renewing. This is because they will have paid down part of their principal over those five years, while also potentially seeing an increase in their income or the value of their property. These borrowers will therefore have room to refinance their mortgage if needed.
The next largest group of renewing borrowers have a fixed-rate mortgage of less than five years. Most of these mortgages were taken out in 2023 and 2024 when mortgage interest rates were elevated. These borrowers are less likely to see a large increase in mortgage payments.
Chart 4: Maturity date of outstanding mortgages
Conclusion
The Bank now has access to an enhanced RESL dataset provided by OSFI that offers an ongoing picture of outstanding mortgage and HELOC loans. This allows the Bank to better assess household vulnerabilities and any risks posed to financial stability. Future work using the additional details in the enhanced dataset can address a variety of questions, such as the share of borrowers who refinanced, changed lenders, changed mortgage products or made prepayments on their mortgages.
Endnotes
- 1. For more information about mortgage finance companies, see D. Colletti, M.-A. Gosselin and C. MacDonald, “The Rise of Mortgage Finance Companies in Canada: Benefits and Vulnerabilities,” Bank of Canada Financial System Review (December 2016): 39–52.[←]
- 2. These new lenders account for less than 1% of all loans reported in the dataset.[←]
- 3. See Canada Mortgage and Housing Corporation’s “Residential Mortgage Industry Data Dashboard.”[←]
- 4. May 2023 is when values for all data fields became available. For earlier months, data for certain fields were not collected.[←]
- 5. A combined mortgage and HELOC plan, also known as a combined loan plan, can include multiple products or features, such as mortgages and revolving lines of credit. For more information, see Office of the Superintendent of Financial Institutions, “Clarification on the Treatment of Innovative Real Estate Secured Lending Products under Guideline B-20” (advisory, June 30, 2022).[←]
- 6. Since 2012, high-ratio mortgages could only be used on properties with a purchase price below $1 million. In September 2024, the Government of Canada announced that it would increase the price cap to $1.5 million for insured mortgages, effective December 15, 2024 (for more, see Department of Finance Canada, “Government announces boldest mortgage reforms in decades to unlock homeownership for more Canadians” [news release, Ottawa, September 16, 2024]). That change has yet to be reflected in the loans we analyze.[←]
- 7. See O. Bilyk, A. Ueberfeldt and Y. Xu, “Analysis of Household Vulnerabilities Using Loan-Level Mortgage Data,” Bank of Canada Financial System Review (November 2017): 21–33.[←]
- 8. We cannot produce a similar distribution table for the stock of mortgages because income tends to be verified only at origination.[←]
- 9. An effective amortization period is the amount of time it takes to repay the remaining balance on the loan at the current pace of repayment.[←]
- 10. See S. Murchison and M. teNyenhuis, “Variable-rate mortgages with fixed payments: Examining trigger rates,” Bank of Canada Staff Analytical Note No. 2022-19 (November 2022).[←]
- 11. In the RESL2 data, banks are required to report an appraisal value that is updated periodically using house price indexes. Guideline B-20 also states that the LTV ratio should be recalculated upon any refinancing and, whenever deemed prudent, given changes to a borrower’s risk profile or delinquency status.[←]
- 12. For more, see M. teNyenhuis and A. Su, “The impact of higher interest rates on mortgage payments,” Bank of Canada Staff Analytical Note No. 2023-19 (December 2023).[←]
Disclaimer
Bank of Canada staff analytical notes are short articles that focus on topical issues relevant to the current economic and financial context, produced independently from the Bank’s Governing Council. This work may support or challenge prevailing policy orthodoxy. Therefore, the views expressed in this note are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank.
DOI: https://doi.org/10.34989/san-2025-1