Canadian Household Credit Slows, As Consumer Credit Growth Plunges Lower

Canadians are still borrowing a lot, just not for anything other than mortgages. Bank of Canada (BoC) data shows household debt held by institutions reached a new all-time high in November. All of the monthly increase was due to mortgages however, as consumer credit fell.

Canadian Households Have Over $2.2 Trillion In Mortgage Debt

Canadian household debt reached a new all-time high, but lost a little steam. The balance of household debt reached $2.26 trillion in November, up 0.22% from the month before. This represents an increase of 3.9% from last year. The 12-month rate of growth is lower than it was a month before, but still higher than the same month last year. Yeah, it’s tricky as heck when looked at as an aggregate, so let’s dive into the segments.

Canadian Household Debt Outstanding, Percent Change

The annual percent change of total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Canadian Households Owe $1.6 Trillion In Mortgage Debt

Growth for mortgage credit reached is coming in hot once again. The balance of mortgage debt reached $1.62 trillion in November, up 0.37% from a month before. This represents an increase of 4.6%, when compared to the same month last year. The 12-month trend has now accelerated for 8 consecutive months.

Canadian Household Debt Outstanding In Dollars

Total debt held by Canadian households, in Canadian dollars.

Source: Bank of Canada, Better Dwelling.

Consumer Credit Growth Falls To The Lowest Level In Over 5 Years

Consumer credit growth is quickly becoming an area of concern, as it grinds to a halt. The balance of consumer loans reached $639 billion in November, down 0.16% from a month before. Compared to last year, this is just 2.2% higher. It’s actually the lowest 12-month growth since July 2014 for the segment.

Canadian Household Debt Change

Annual percent change in debt held by Canadian households.

Source: Bank of Canada, Better Dwelling.

Consumer credit growth is the big takeaway in this report. Since CPI reached 2.2% and is climbing, real growth may begin to come in flat. This is a very odd dynamic, since real estate sales normally drive consumer credit growth.

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  • Lorence 4 years ago

    Thank you Daniel for another interesting article.
    I have a question based on your closing comment where “…real estate sales normally drive consumer credit growth.” Is real estate sales volume actually increasing or is it real estate prices increasing due to a tightening of supply causing an increase to the total value of transactions?

    • Ed Higgins 4 years ago

      Sales and prices are higher, but there’s a few things they’ve been pointing out.

      Not sure if they intentionally did this, but if you scroll down a little further it autoscrolls into an article on sales volumes. Basically it’s higher than last year, but not as much as the y/y stat implies.

      Pair that with the B-20 Guideline delaying buyers, and forcing combined cohorts into the recent numbers, and it’s not all that clear this is the bump in growth. But I think BDs consensus was even if it’s not the bump in growth, if people think it is growth, it can materialize.

      Hope I didn’t butcher it.

  • straw walker 4 years ago

    Zolo indicates in the past 28 days for the city of Vancouver detached house sales were 39 and that’s a decrease, while new listing for the same period were 150.
    If your buying a townhouse or a condo then yes sales are higher and prices a stable, but not so for detaches houses.
    In most districts of the Metro area sale prices (detached homes) are below 2019 assessed values, and below asking.

  • Holton 4 years ago

    We are at late stage capitalism where young talented people who earn above average income cant afford basic dignity like housing.

    We either put heavy tax on people and corporates that own multiple residential real estate or we face riots like HongKong.

    Under Liberals housing has become unaffordable, that is their legacy.

  • Ken Wu 4 years ago

    So, you guys call that tiny little bump on the mortgage credit line “accelerating?”

    This is why I canceled my sub to Better Dwelling. Just another pump and hype rag now.

Comments are closed.