Canadian Mortgage Borrowing Fell Off A Cliff In 2023

Canada’s real estate slowdown is still trickling through the mortgage market. Bank of Canada (BoC) data shows mortgage originations continued to fall in January. The volume of new lending has virtually dropped off a cliff, as higher rates throttle leverage. Sky-high home prices that are falling aren’t exactly providing much buyer incentive either. 

Canadian Mortgage Borrowing Has Been Unusually Slow

Canadian mortgage originations were unusually slow as higher rates bite into leverage. The value of new mortgage funds fell 16.1% ($4.0 billion) to $20.7 billion in January. It represents a massive 41.0% (-$26.6 billion) decline when compared to the same month last year. January is normally a relatively boring month, but this is far from a seasonal slowdown typically observed.  

Canadian Mortgage Borrowers Are Pulling Back 

The total monthly value of Canadian mortgage funds provided by lenders.

Source: Statistics Canada; Better Dwelling.

Mortgage Borrowing In Canada Dropped More Than 41%

Annual growth highlights just how abrupt this change over the past year has been. The -41.0% decline in January is the sharpest observed in the past 10 years of available lender data. Considering it was the slowest month since 2019, and the weakest January since 2015—it wouldn’t be hard to believe it was the slowest in a generation.  

Canada’s Mortgage Originations Have Shown Unusually Slow Growth

Annual percent growth in the dollar value of Canadian mortgage funds provided by lenders. 

Source: Statistics Canada; Better Dwelling.

When originations are this low a reversal on the horizon relatively soon is expected. An abrupt decline in purchasing without an impacted labor market tends to mean delayed buyers, not ones that have changed their mind. Without prices falling sharply from here or the labor market shifting, a bounce of some sort is expected.  

14 Comments

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  • Mark Bayky 11 months ago

    All those people that bought houses in the last 5 years want 2 per cent mortgage rates again so they can sell their tiny run down house in Toronto for over a million . They’re out of luck

    • Kim 11 months ago

      I would expect they will have to wait minimum 10 years to get what they
      paid.
      You have to bite a bullet and make some hard choices and take a loss.
      Things happen life happens.

      • Francis 11 months ago

        And that’s optimistic. It took 20 years after the last bubble imploded in 1990, at least in Toronto.

    • Gobsmacked 11 months ago

      What’s scary is that those tiny rundown one-million-dollar houses you are referring to are not within the GTA but in rural Ontario. take a look at listings for outside the GTA – garbage quality moldy shacks selling for a million, once referred to properly as cottages, now being sold as year-round” homes. What gobsmacks me is that someone always ultimately buys these dumps for the asking price. Where are these people getting money from and why drown it in rural Ontario houses that are of questionable quality?

    • Attila 11 months ago

      The only saving grace for home prices, is that people are fully employed. No need to list your home. Mortgage payments might be double, but people force out the monthly obligation….but if the job market changes…and tens of thousands of layoffs come….you will see a sh*tstorm like non other since 2008. SOLD FOR $500,000 UNDER ASKING.

  • Kim 11 months ago

    Keep throwing that at the wall to the sheep. Maybe they will follow.
    I personally will be waiting, prices will continue to drop.
    The negative effects of higher interest rates is only going to start when the renewals come up part 2 to a 5 part crash.
    Market corrections take a lot longer to work there way thru not 13 months.

  • Attila 11 months ago

    Im 63 years old and the son of Hungarian Immigrants. I bought my first home in Oshawa when I was 20 years old. $5,000 deposit on my shiny new CIBC Visa. The $37,000 mortgage was paid off in 3 years. 1400 sq ft 2 story 3 bedroom 2 bath finished basement with a decent yard. I sold it 5 years later for $95,000. The equity was my seed money for life. I have bought and sold dozens of Muskoka acreage / waterfront properties in my 63 years….Our Federal Liberal leader has butchered any hope in a future for our children. Arrogance and stupidity in social policy has made life impossible. I wouldn’t trade another 50 years in this world for the one I enjoyed in the 60s 70s 80s and 90s. Communist Canada is done. I feel sorry for this generation.

  • Craig 11 months ago

    Those who rode the wave of cheap debt are now whinning about interest rate normalization. Higher rates are better for pensioners, workers, savers… everyone but investors.

    • Alice 11 months ago

      Shawn Fraser is bringing in way too many immigrants into Canada.

    • Robert christian 11 months ago

      Ummm, pretty sure itsinvestors that want higher rates. I think you might be referring to speculators.

  • Sam 11 months ago

    They will lower rates. They’ll be forced to. The whole Canadian economy is built on real estate. The voters have been mostly patient with Trudeau given their overall paper net-worth was going up due to real estate values. When people realize they’re getting poorer they will blame the policy makers. Rates will drop in 2H 2023.

  • Josh F 11 months ago

    Sean Fraser has a million reasons a year to invest in Toronto real estate.

  • J 11 months ago

    It’s all investors crying for low rates because the rental incomes are no longer covering their cash flow needs. The system will break once the US pushes rates up > USD/CAD induced import inflation > unknown.

    Also look to the UK, they’re running at 10%+. Like all historical Financial booboos, the UK leads the way. Buckle up for the next 12-18months. The economy will tank because consumer confidence is way negative.

    May the force be with all of us.

  • Jujein 11 months ago

    Home in suburban Toronto, 1960, for C$14,800. Roughly, 400 oz of gold.

    Same home sold last fall for just over C$1,000,000. Roughly, 400 oz of gold.

    Not a gold nut but here’s the rub. An average Canadian income earner in the early 60’s could earn $15k gross after three years! An average income earner in Canada 2023 can earn $1 million gross after 12 years!

    The modern average Canadian has gotten 4 times poorer than their 60’s counterpart.

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