The most recent data indicated that despite increasing mortgage rates, there is currently a low percentage of clients in arrears on mortgage loans. During COVID-19, the figure was nearly double what it is now. The latest indicators show that 7,305 Canadian mortgages were in arrears out of 5.1 million, which represented only 0.14%

Still, in the last few quarters, Banks have been preparing themselves for a possibly challenging 2023 by keeping money in reserve for “bad” debt. However, TD Bank President and CEO Bharat Masrani feels that there is a good chance of no recession but did indicate that a slowdown could be expected due to the rise of interest rates. He pointed to the fact that the employment rate is good and continues to remain strong, “The job market has been remarkably strong and continues to be strong,” he said.

Canada’s Big Bank CEOs recently assessed the current situation of their mortgage clients and the “vulnerable” clients with the possibility of a recession in mind. According to the new President and CEO of Scotiabank, Scott Thomson - they have an estimated 20 000 borrowers that can be considered “vulnerable” There are borrowers with high loan-to-value mortgages, low credit scores, and lower deposits in their checking accounts and home valuations that could be influenced by the market conditions. These can be considered “vulnerable” clients, making up 2.5% of the total portfolio of Scotiabank.

President and CEO of RCB, Dave McKay, said that they are keeping a watchful eye on their clients base to ensure they are not at unnecessary risk. Should clients fail to make regular payments, there are options to assist before selling their homes.

“We look at incomes, we look at the stress of inflation on expenses in a household, and we monitor cash flow to interest payments, as you would in any corporation. We do that for every single consumer in our portfolio because over 80% of our clients have their core checking and core cash management with McKay said that through intelligent forecasting, they are able to predict which clients “will or will not have a cash flow challenge” should the economy enter a moderate or severe recession, he said.

“You have skip-a-payment deferrals, you have maturity extensions, whatever it happens to be, you have a lot of ways to work with that client,” McKay