Canada

Canadian Banks Hold Less Mortgages Than A Year Before, For The First-Time Ever

Slow Canadian real estate sales may be starting to weigh on the country’s largest banks. Canadian Bankers Association (CBA) numbers show an annual decline in mortgages. The annual decline of mortgages is the first for the country’s largest lenders.

Canadian Banks Hold Over 4 Million Mortgages

Canada’s largest banks are seeing the number of mortgages they hold decline for the first-time ever. They held 4,755,951 mortgages as of October, virtually a flat 0.01% decline from the month before. The decline works out to a 0.3% decline compared to the same month last year. The most recent three months of data is the first time the country’s largest banks held less than the year before.

Canadian Mortgages Held At Banks

The number of mortgages held at large Canadian banks.

Source: CBA, Better Dwelling.

Mortgage numbers are down from peak, and the recent trend of declines is getting larger. Mortgages hit peak in December 2017, and fell 0.41% from there – a drop of 19,886 mortgages. The annual pace of growth hit negative for the first-time in August 2018. The following months showed increasingly larger declines, through the latest data point in October.

Canadian Mortgages Held At Banks (Change)

The annual percent change of Canadian mortgages held at large banks, compared to one year before.

Source: CBA, Better Dwelling.

Ontario Represents A Third of Those Lost Mortgages

Ontario joins the rest of Canada in printing its first annual decline. Banks held 2,006,116 mortgages in October, down a relatively flat 0.01% from the month before. This represents a 0.12% decline compared to the same month last year. The province’s peak was also in December 2017, and was last reported -0.31% lower. This is the first annual decline in Ontario, representing a third of the national decline.

Ontario Mortgages Held At Banks (Change)

The annual percent change of Ontario mortgages held at large banks, compared to one year before.

Source: CBA, Better Dwelling.

British Columbia Returns To Annual Declines

British Columbia mortgages returned to declines, after taking a break. There were 643,437 mortgages at large banks in October, flat from the month before. There are 0.05% less mortgages compared to the same month one year. The declines are small in BC, representing less than a couple thousand mortgages. The peak was hit in December 2017, and the market is down 0.26% from there.

British Columbia Mortgages Held At Banks (Change)

The annual percent change of BC mortgages held at large banks, compared to one year before.

Source: CBA, Better Dwelling.

The industry narrative is obviously that B-20 is reducing OSFI regulated borrowers. However, the 2 provinces most impacted by the measures represent less than a third of the drop. Income to home price ratios aren’t nearly as high outside of the two provinces. This means B-20 isn’t the boogey man it’s being set out to be. More likely, future demand was pulled forward do to FOMO. Now we’re seeing levels balance out, and rising rates do its thing.

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31 Comments

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  • Ian 7 months ago

    Yikes. These numbers are most likely heading lower from October as well.

  • Lok 7 months ago

    BOC holds rates. Spring recovery boom, here it comes.

    https://www.bankofcanada.ca/2019/03/fad-press-release-2019-03-06/

    • GS 7 months ago

      That’s not what that means. It means the economy is doing too poorly to raise rates, the dollar is going to drop, and the cost of imports will rise.

      • Ethan Wu 7 months ago

        He REALLY has the wrong take. Foreign bond holders are dumping Canadian assets, likely pointing to poor foreign demand for Canadian dollar based assets. This bond chart from the other day showed how serious this situation is.

        https://twitter.com/StephenPunwasi/status/1102610820419280896

        While not directly related to housing, poor bond demand can mean higher funding rates, weaker dollars, *and* a rise on import inflation. The BOC is facing a perfect storm.

    • CanadaSucks 7 months ago

      Canadian dollars is getting lower and lower against us currency. He should have raise the rate. By the time he takes actions to kill Canada hyper inflation, he will need to raise rate by 5 or 6% in a hope to stop currency devaluation.Look at Argentina history to see what currency devaluation does to your economy.

      Bad move, he prefer to save the housing market instead of the whole Canadian economy. What a clown he is.

      https://www.xe.com/fr/currencyconverter/convert/?Amount=1&From=USD&To=CAD

      • Bluetheimpala 7 months ago

        Really? Argentina? I don’t believe comparing Canada to a developing latin american country is very meaningful. As an exporter of goods and services a lower CDN dollar vs US means we become more competitive for investment, in general. I might as well compare my dog to a pony and wonder why she looks upset when I try to ride her. Yeehaaa! BD4L.

        • CanadaSucks 7 months ago

          I dont care what you think. We do you reply to me if you don’t me message. I don’t care . what you think. No wonder why people have stop commenting

    • Milan 7 months ago

      No. If there is any small bounce, it will be the sheep buying being led to the slaughterhouse.

      There will be no recovery if job losses and layoffs start to pick up. If anything, we will get FONGO and bag holders.

      When rates are held, or reversed, it is already too late! Means we have slipped into economic decline or an early onset recession that will run its course until some sort of intervention takes places (additional stimulus, QE). Problem is… our central bank doesn’t have much Ammo and they will decimate the dollar in the process.

  • SUMSKILLZ 7 months ago

    “This means B-20 isn’t the boogey man it’s being set out to be.” Okay, you convinced me once and for all, no more thinking about Baba Yaga.

  • Michael 7 months ago

    I would make an assumption that most people can’t qualify for mortgages at current prices and are going to private lenders which may explain why banks are issuing less of them? Curious to see where these private lenders are getting money and how much of is tied to current equity in real estate.

    • Grizzly Gus 7 months ago

      Bang on, B-20 was to reduce our big banks exposure to the riskiest of borrows and the private mortgage market has been more than willing to assist. The trillion dollar question, as you said, is where has all this private money been coming from?

      If its just wealthy people putting some of their money to work then loses should be contained…….. If those loans are funded by uncle Leo who took out a 300k HELOC on his Oshawa detached which he bought 6 years ago for 200k then our big banks are just as exposed.

      The same concern comes to mind with the “rich” foreign buyer segment. Are they moving actual wealth and money here to buy property …………………. OR are they leveraging inflated assets from their home countries to speculate on inflated assets in ours.

      • Michael 7 months ago

        Do you think that private debt would be reflected in the new total household debt numbers when it’s reported ?

        • Smaug 7 months ago

          We’ve already seen a jump in the household debt figures for Q4 2018, so I believe it already is.

  • Robert 7 months ago

    Less mortgages = less indebted Canadians. We all screaming about amoubt of debt, so isn’t it good news in general? 🙂

    • Maher 7 months ago

      Kind of, but not really. We need credit to keep moving, because current monetary policy is based on expansion for the sake of expansion. When we get less people creating new loans, they’ll slash rates further below neutral. The problem is, when debt loads are this high, the “temporary” stimulus of negative real rates inflates has no impact. Instead, you end up with a really weak dollar, and murder the portfolio of those that retired.

    • Grizzly Gus 7 months ago

      Less total mortgages held at big banks = less total mortgages held at big banks.

      This does not imply anything about total debt outstanding, debt as a percentage of income, debt vs equity, ability to repay etc. It does not include numbers from private lenders, who have for the most part been seeing increases in their volumes recently.

    • Brad 7 months ago

      Actually it generally means *more* indebted Canadians. People aren’t giving up on buying, they are going to the non-OSFI regulated B-lenders who are giving higher rates than the banks… all because the banks can’t approve them due to B20.

    • Brad 7 months ago

      Mind you it’s a good thing, as OSFI knows this thing is going to have to go through a major correction and have protected the big banks while offloading the risk to the B lenders… that way the overall economy doesn’t go through a credit freeze.

      • Smaug 7 months ago

        Exactly. If CIBC or RBC is in trouble, we’re all in trouble. On the other hand, if Joe’s Mortgage & Burger goes under, nobody cares, and no taxpayer money will be offered up to save him. Yes, there will be many Joe’s M & Bs, but that’s OK, they won’t create contagion like a single large bank would.

        • Grizzly Gus 7 months ago

          That is unless the money Joe loaned out came from him leveraging his burger shack and taking out a HELOC from CIBC or RBC.

  • DB 7 months ago

    I just got 13 grand on my tax return : }}}}}} Now just have to find a place to invest it….Not in RE….

  • MM 7 months ago

    Who are these 4 million people with mortgages at large banks? Are they insane? Banks always have draconian rates compared to mono-line lenders.

    • Isaac L 7 months ago

      😂 that’s what I think every time when I read that 3/4 of mortgage debt is held by big banks. It’s a big premium they’re paying to have it appear in the same app.

    • El Nino 7 months ago

      I locked in last December with TD for 3.24% over five years. It was the best rate at the time

  • Rana 7 months ago

    Time for re investors to lose their pants

  • Broker 7 months ago

    Canadian Banks Hold Less Mortgages Than A Year Before, For The First-Time Ever?

    You sure about that?

    Banks had negative mortgage growth in the early 1980s.

Comments are closed.