Two weeks ago, I had a conversation with an appraiser this week who told me that they had done over 30 appraisers for lenders. The reason for this is simple, borrowers are not making payments and therefore are starting the power of sale (or foreclosure) process. The appraiser had mentioned three things:
- The volume of requests hasn’t been seen in 5-7 years
- Lenders typically didn’t do this leading into the holidays
- The lenders themselves are primarily in the alternative space but that there were a “handfull” that were at the big banks
This conversation with him, had me looking for data about arrears whether it come from the Bank of Canada or a handful of services that I subscribe to. Here is what i noticed in combing through the data:
- Auto delinquencies are at decade highs as are what is classified as “other instalment loans”
- Credit cards are relatively flat as are auto loans
- Mortgage delinquencies, despite this anecdotal story, have barely moved off the lows we saw in 2021/2022
In jumping into the data around insolvencies there are two major things thing that stood out:
- Consumer insolvencies were up 26% Year-over-Year (YoY) but despite this it is just getting back to pre-covid levels so overalll this number has bark than bite
- The concerning part is that the $ volume is up 90% YoY which is believed to be an increase of homeowner bankruptcies
- Business insolvencies are up 63% YoY which is hte highest number since 2011. The dollar volume in these is staggering as there are some larger businesses running into problems. This stat was surprising to me but given the amount of calls I’ve received over the last two months from smaller business owners about CEBA loans made this stat match anecdotal evidence.
As businesses go under, so too does the economy. This data point that supports a early 2024 recession which has led some to believe that this why is the Bank of Canada has pivoted.
