New data from Equifax Canada indicates that missed mortgage payments in Ontario are costing people more than ever, as an economist warned that the numbers seen in the province are "significantly higher than those observed" before the pandemic.

In the first quarter of 2024, according to the credit bureau, the total mortgage balance that entered severe delinquency, which is 90 days or more without payment, exceeded one billion dollars for the first time.

Rachel Patalia, an economist at Royal Bank of Canada, told Your Morning host Lindsey Deluce: "It's definitely a sign of financial pressure. I wouldn't say we're overly reliant on this number."

While national mortgage delinquency rates remain "on par" with what they were before the pandemic, Ontario is considered an outlier. However, according to Patalia, there are reasons that explain this increase.

She said, "The total value of mortgage loans in Canada has risen significantly in the past few years, partially due to substantially higher house prices. So, average missed mortgage payments will be larger now compared to a few years ago."

Should this data serve as a wake-up call?

Patalia stated that the figures released from Ontario are "not surprising at all" as rising housing costs and tight labor markets contribute to the worsening picture of mortgage delinquency.

She continued, "Households in Ontario have to spend a lot of their paychecks to cover ownership costs. The wage gap doesn't really compensate for that."

Households in Ontario and British Columbia also tend to bear higher debt burdens as a result, according to the economist. However, she also believes that the province in Ontario at least comes from a "relatively favorable starting point."

Patalia said, "In the five years or so leading up to 2023, the share of delinquent mortgages was half the national rate. There’s room for delinquency rates to rise a little before we need to sound any kind of alarm."

Could people start losing their homes?

However, an estimated 34,000 households in Ontario missed mortgage payments in the first quarter of 2024 – a 23 percent increase from the first quarter of last year.

Does this mean that an emerging scenario exists where people could start losing their homes?

Patalia does not believe so, as many people have begun changing their "consumption patterns," allowing them to absorb higher interest rates.

She explained, "This has shown through a slowdown in spending. It's also not expected that labor markets will weaken more than this cycle."

Patalia clarifies that the unemployment rate is important because it is closely tied to mortgage delinquency cases. She anticipates that as long as unemployment rates remain "very normal," the shift in consumption will continue to move away from goods and services toward interest payments.

"As long as people keep their jobs... we believe that people will generally be able to manage."

She warned of one qualifying factor: "Of course, this assumes that the Bank of Canada won't change its course anytime soon."