Canada’s Largest Real Estate Markets See Mortgage and HELOC Payments Soar

Toronto and Vancouver real estate prices are cooling, but payments are still soaring. Canada Mortgage and Housing Corporation (CMHC) numbers show a big increase for the average payment in Q3 2018. The average payment on mortgages and home equity lines of credit increased at over 2x the rate of inflation.

Toronto and Vancouver Mortgage Payments Rise Over 5%

The average mortgage payment ripped higher across Canada’s largest cities. Toronto households with a mortgage were paying an average of $1,710 in Q3 2018, up 5.95% from one year before. Vancouver, the country’s most expensive market, climbed to $1,734, up 6.34% from the year before. To contrast, Montreal’s average mortgage payment increased to $1,081, up 3.44% from the year before. Montreal is now outperforming the two in price growth, but lagged for many years prior.

Canadian Average Monthly Mortgage Payments

The average monthly mortgage payment in Canada’s 3 largest cities, in Canadian dollars.

Source: Equifax, CMHC Calculations, Better Dwelling.

Higher payments may be putting a drag on ownership, as the ratio of households began falling. Toronto’s share of consumers with a mortgage fell to 25% in Q3 2018, down 3.84% compared to a year before. Vancouver fell to 27%, down 3.57% from one year before. To contrast, Montreal made no movement from 29% from the year before.

Share of Canadians With A Mortgage

The share of Canadian consumers with a mortgage in Canada’s 3 largest cities.

Source: Equifax, CMHC Calculations, Better Dwelling.

Toronto and Vancouver HELOC Payments Rise Over 19%

Toronto and Vancouver’s average HELOC payment climbed even more than mortgages. Toronto HELOC payments increased to $583 on average in Q3 2018, up 19.47% from the year before. Vancouver reached $652 in Q3 2018, up 15.19% from the year before. Montreal topped out both cities with an average of $680, up 20.57% from a year before. Payments increased by nearly a fifth in just one year, which is a huge climb.

Canadian Average Monthly HELOC Payments

The average monthly HELOC payment in Canada’s 3 largest cities, in Canadian dollars.

Source: Equifax, CMHC Calculations, Better Dwelling.

Toronto and Vancouver real estate prices are down from highs, but rising rates pushed payments higher. The increase is especially noticeable on variable rate products like HELOCs. HELOCs payments are still larger and experiencing much higher growth in Montreal though. What’s up with that?

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  • Ethan Wu 5 years ago

    and that kids, is how Montreal’s new construction boom is probably being funded. Of course, blame foreign investors. It’s not cool when we point out domestic schmucks selling condos as investments, complete with return analysis but no regulation.

    • Jason Chau 5 years ago

      That’s funny. I thought this the other day when my neighbour was trying to convince me to buy condo assignments with him.

      The guy boasts that he’s using his home equity to make he’ll more than he would at his desk job by the time it’s complete. Overseas buyers are playing a derivatives games with money they can spare. Locals are playing it with their life savings.

      • kwo 5 years ago

        Exactly. And with our banks’ “look the other way” attitude with respect to proof of income (who cares when the mortgage is backed by CMHC), overseas buyers would be stupid not to take advantage. That’s how people like Meng Wanzhou, a literal billionaire, get a $15M mortgage with $0 down.

        If it all goes up in smoke, most can just jump ship and leave Canada for a few years. What’s CMHC going to do? Who cares, the taxpayers have its back. They’ll be too busy going after Canadians anyway.

      • Smaug 5 years ago

        Correction: Locals are playing it with their life borrowings.

    • SUMSKILLZ 5 years ago

      Every social gathering in Montreal is chock full of condo FOMO…these same people used to tell me to shut up when I used to banter on about Toronto’s RE scene years ago. I sorely miss the old days of talking about food&wine, families, new home businesses, F1 & soccer.

      “no, I don’t want to take a drive to see your building under construction” is something I find myself saying far too often at parties.

      I guess I wish they were buying cottages instead. That, I’d find interesting. Condos, sorry, nope.

    • george 5 years ago

      thanks Ethan! there should be a Thank you or Thumbs up button.

  • Investor 5 years ago

    At what point does everything go burst? Folks don’t seem to be bothered that they’re laying down landmines and walking into the landmines at the same time. At some point, regulations won’t help to prevent those things going off. Unfortunately, everyone gets hurt, directly or indirectly.

    • miayagi 5 years ago

      Don’t forget even though the news cycle makes it seem like this has been happening forever, it’s only been the past few years. Prior to 2014, you couldn’t pay someone to take a Toronto condo.

  • M.Bury 5 years ago

    “Both National Bank of Canada (NA.TO) and Laurentian Bank (LB.TO) reported lower-than-expected quarterly earnings. Bank of Nova Scotia (BNS.TO) just recently posted its quarterly earnings below expectations.”

    3 out of 4 banks that reported this week missed earnings…

    • dirty101 5 years ago

      Hmm interest rates are rising and the banks are still struggling with profit growth.. what gives?

  • CanadaSucks 5 years ago

    There is too much inflation out there: food, gasoline (oil is going up again), municipal taxes, carbon taxes and so on.

    Broader and Wide inflation is now killing Canadian economy. High inflation is one among many reason why we are now seeing an housing price collapse.

    Oil is going up again. If it continues this way expect higher inflation in a month or two from now. Diesel is used in the transportation of everything. Higher diesel price mean higher prices on everything and higher inflation.

    Bank will need to raise provision for bad loans ( mortage default) and this will attract international investor attention. How this will affect the Canadian dollar.

    Government reported inflation statistics are BS and voluntary underestimate real inflation

    • Big Joe 5 years ago

      even when oil prices went bizerk ($140 a barrel) prices of everything went up because fuel prices went up, when prices went down how come the price of goods never decreased with it. Everything gets smaller and more expensive. Look at chocolate bars for example, when I was a kid 20 years ago a chocolate bar was a dollar now they are well over 2$ and they’ve even decreased in size.

      We just keep bending over and handing out our money

  • Tenzin Namdhak 5 years ago

    It is reasonable given that Bank of Canada increased the interest rate to 1.75% and that major banks have started increasing their prime lending rates to the consumers from 3.70% to 3.95% and hence we see the effect to those who has variable rates in their mortgage payment and saving accounts.

  • Tom Wolfe 5 years ago

    ‘Toronto households with a mortgage were paying an average of $1,710 in Q3 2018.’

    That would indicate that the average mortgage associated with that payment is about $300K.

    CBC/ReMax just reported that the average Toronto detached house is $1.3M.

    So the average person buying a detached house in Toronto needs to bring $1,000,000 cash with them.

    Compare that to 1995 when 10% down qualified you for a $300,000 mortgage on a nice detached house in Toronto.

    Seems to me that the mortgage is the same but houses prices are very different.

    Is this whole scenario supported by Monopoly money?

    • Ian 5 years ago

      I’m guess that has to do with the fact that the vast majority of mortgages were issued before the sudden surge in prices. i.e. most houses and condos were bought pre-2015, so the size of mortgage was much lower.

      Somewhat like rental prices. A “new” rental cost $2,000/month for a one bedroom, but the average rent paid in Toronto is only $1200, including all sizes of homes, with many being larger or full houses. For instance, I’ve been renting from a house for 10 years now, any only pay $1800/month. Contrast that with someone renting a one bedroom condo in the same neighborhood for $2400/month.

      • Tom Wolfe 5 years ago

        The same article suggested that the average Toronto house will be worth $3.6M by 2026. So I guess Joe Blow Canada will be putting $3M down. First time home buyers better start squirrelling away $35,000 a month for the next 84 months or they will miss out!

  • randy cok 5 years ago

    i pay 1800/month for 125k mortg. So wtf is going on with these low montly payments. is bmo blowing me?

    tell us the fg mortg amts not the montly payments.

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