Alberta Mortgage Arrears Skyrocket
Although bankruptcy trends appear to be favorable with improvements in the provincial economy recent data from the Canadian Bankers Association shows mortgage delinquencies skyrocketing in Wild Rose Country.
In spite of our economic strength provincially, the rate of mortgages in arrears in Alberta (.84%) is currently more than double the national average (.41%) as of May 2011 and more than five times the delinquency rate before the start of the recession in late 2007.
Percentage of Residential Mortgages in Arrears (last 20+ years)
The fact that arrears rates are so much higher in Alberta clearly illustrates that bankruptcy statistics alone do not tell the whole story of whether Alberta consumers are struggling with too much debt.
The reasons being cited by market mavens for the mixed messages of falling bankruptcy rates and high mortgage delinquencies are numerous from; consolidating, restructuring and renegotiating debt terms through Proposals being more popular in Alberta, to demographic factors such as younger and less established homeowners in Alberta, to the fact that the pre-recession period in Alberta was so strong that it led to a higher percentage of consumers overextending themselves, to speculative investment activity and excess.
The reasons for these events, or the "why", should not be the primary concern to businesses that extend credit terms to their customers but rather the "how do we best respond and adjust" to these trends and events.
As suggested in our April/May 2011 newsletter; continue to maintain tight control on aging receivables and by no means consider reducing current levels of vigilance with customers. How much vigilance is enough? …ask yourself this questions; What is a bigger priority for my customer to pay; their mortgage or my invoice?
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