Investor Presentaiton
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1.0
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1998
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BMO Financial Group
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Structure of the Canadian residential mortgage market with
comparisons to the United States
Conservative lending practices, strong underwriting and documentation discipline have led to low delinquency rates
Over the last 30 years, Canada's 90-day residential mortgage delinquency rate has never exceeded 0.7% versus the U.S.
peak rate of 5% in 2010
Mandatory government-backed insurance for high loan to value (LTV >80%) mortgages covering the full balance
Government regulation including progressive tightening of mortgage rules to promote a healthy housing market
Shorter term mortgages (avg. 5 years), renewable and re-priced at maturity, compared to 30 years in the U.S. market
No mortgage interest deductibility for income tax purposes (reduces incentive to take on higher levels of debt)
In Canada mortgages are held on balance sheet; in the U.S. they may be sold or securitized in the U.S. market
Arrears to Total Number of Residential Mortgages (%)
2007
•
Recourse back to the borrower in most provinces
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Prepayment penalties borne by the borrower whereas U.S. mortgages may be prepaid without penalty
Mortgage Delinquencies
Equity Ownership (%)
2008
2009
2010
-Canada
-United States
Source: BMO CM Economics and Canadian Bankers' Association as at October 1, 2021
This slide contains forward looking statements. See caution on slide 2
2011
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2019
2020
2021
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1991
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Canada
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Investor Presentation • October 2021
39
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2021 -View entire presentation