Despite the rise in interest rates, mortgage defaults remained at a lower level than they were before the pandemic for National Bank customers, said its president and chief executive officer, Laurent Ferreira, at a conference bringing together, on Monday, the big bosses of the main Canadian banks.
Mr. Ferreira clarified that the Montreal financial institution had recorded “a small” increase in defaults for variable rate loans, but that this proportion was lower than what was observed on the side of fixed rate loans and at the thresholds. before the pandemic.
“Overall, when we look at the performance of our loan portfolio and the ability of our clients to handle higher rates, it’s very good,” he said in an exchange with the RBC Capital Markets banking analyst Darko Mihelic.
Asked about the subject, Mr. Ferreira indicated that the size of bank deposits suggested that household finances remained “robust” despite the pressure imposed by rising interest rates and the increase in the cost of living. He mentioned that almost a third of mortgage borrowers had increased their mortgage payments in 2022, and that, of those, 80% have a variable rate. “If you look at this cohort, they still have more cash than before the pandemic. Now it’s about the first payments [à des taux plus élevés]. Will it erode over time? Obviously, but they’ll be able to keep up the pace. »
The banker indicated that 10% of the portfolio of fixed rate mortgages are maturing in the next 12 months and that a good share of customers who are about to renew have a loan with a lower amortization period. At 25 years.
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