Canadian Banks See Mortgage Debt Surge In Growth, Led By Ontario and PEI

Canadian real estate has seen record sales and record prices — fueled by record mortgage debt. Bank of Canada (BoC) data shows banks held a record amount of mortgage debt in Q1 2021. If broken down by region, we can see Ontario and PEI are the fastest-growing markets. Considering Ontario is such a large balance, it’s surprising to see so much growth. As for PEI, because it’s such a small region, it’s interesting to see it lead in growth. When big and small markets move alike, it’s due to excess mortgage credit flooding the system.

Canadian Banks Haven’t Seen Households Borrow This Much In Almost A Decade

Banks haven’t seen households accumulate mortgage debt this fast in almost a decade. Mortgages had an outstanding balance of $1.48 trillion in Q1 2021, up 1.5% ($21.5 billion) from the previous quarter. Compared to a year before, the balance is 8.2% ($111.2 billion) higher. Annual growth is just a little slower than it was a month before. Though it was the second-largest rate since 2012, with the previous quarter being the first.

Canadian Mortgage Debt Growth By Region

The annual rate of growth for mortgage debt held by chartered banks in Canada, by region for Q1 2021.

Source: Bank of Canada; Better Dwelling.

Ontario Mortgage Debt Grew At The Fastest Rate Since 2012

Ontario mortgage debt, half of the mortgage debt held by banks, grew at the fastest rate in Canada. The balance reached $675.1 billion in Q1 2021, up 2.0% ($13.2 billion) from the previous quarter. Compared to a year before, the balance is 11.5% ($69.4 billion) higher. It was the largest annual growth for the province since Q3 2012. The rate was also bigger than any other province, driving the national trend. 

How Canadian Home Builders Handled The Rise In Lumber Costs

The strategies Canadian home builders are using to deal with the volatile price of lumber.

Source: Bank of Canada; Better Dwelling.

BC Mortgage Debt Grew 9% From Last Year

British Columbia households are heavy hitters for mortgage debt, almost all the time. The outstanding balance reached $251.1 billion in Q1 2021, up 2.3% ($5.6 billion) from the previous quarter. This represents a 9.0% ($20.6 billion) increase when compared to the same quarter last year. Annual growth of this size was a little more recent, with Q1 2018 being a little larger. Still, the province is heavily overweight for growth when compared to the rest of the country. 

Quebec Mortgage Debt Is Rising Double-Digits

Quebec is logging double-digit growth for mortgage debt, despite seeing slower price growth. The balance of mortgage debt reached $159.5 billion in Q1 2021, up 2.1% ($3.3 billion) from the previous quarter. Compared to the same quarter a year ago, the balance is 10.1% ($14.7 billion) higher. Only a few markets have seen a price boom across the province, so it’s interesting to see this kind of growth. Worth noting the balance is almost a third smaller than BC, with a larger population.

PEI Mortgage Debt Is The Second Fastest Growing In Canada

One interesting area of growth is PEI, the second fastest-growing market in Canada. The balance of mortgage debt reached $3.0 billion in Q1 2021, up 1.7% ($0.1 billion) from the previous quarter. This represents 11.3% ($0.3 billion) growth when compared to the same quarter a year before. It’s a relatively small segment, so the growth isn’t quite as impactful as say — Ontario, the largest market. However, it shows this isn’t just an issue due to high growth and employment fundamentals. Small regions are experiencing some of the biggest credit growth in the country. 

Experts often attribute the booming growth to excess demand, causing debt growth. Though low rates are designed to pull forward, and stimulate demand — not to accommodate higher amounts of it. When robust growth is seen across every region, it has little to do with fundamentals. Instead, it has more to do with credit-stimulated demand, which catches up really fast.

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  • Hgbvv 3 years ago

    Im in the finance industry, I can confirm that is indeed the case. This is a sign prices will keep rising. The world simply created 30-40% extra cash. There is no way the recall all that cash. No, not even 5% interest rate will do it. We need to face reality. My advice to young people is if you missed Toronto or Vancouver buy in other major cities. Cuz prices wont go down anytime soon because we expanded the money supply by a lot.

  • Debt Slavery 3 years ago

    Canadian people are in debt and in slavery for years and years to come!!!
    The world is in a horrible place now. The largest problem is, as it’s been for a long time, the level of wealth inequality and the control the super rich and corporations have over our government, media and society overall. We currently have the highest level of wealth inequality since before the french revolution. Add global warming to all our other problems and we are in real trouble. North America and the rest of the world have a horrible future coming at us like a runaway freight train. It’s going to hit us hard and the crash us going to be extremely devastating. The government and the media is busy keeping us occupied with PC foolishness, lies, lies and more lies. Leaving the real problems out of discussion. Our government, if you call what Trudeau has government, is happily driving up debt, lining their own and cronies pockets while apologizing to our faces. It’s almost like they don’t really care about the majority at all.
    Meanwhile our poor youth are stuck on their addiction machines giving away every detail of their lives for free creating billion dollar companies that get better and better at controlling us. We are in for horrible ride. It’s extremely sad. Woke people are really woke to the wrong information and are only adding to the problem.

    • BCInsanity 3 years ago

      You forgot about the rampant and out of control drug crisis which has no end in sight.

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