Canadian home buyers appear to have taken the summer off, ignoring the first round of central bank easing. Bank of Canada (BoC) data shows household mortgage credit advanced in June. Annual growth took a step back however, as rate cuts failed to stimulate new credit demand as much as anticipating those cuts previously had.
Canadian Households Have Over $2.19 Trillion In Mortgage Debt
The outstanding balance of residential mortgage credit owed by Canadian households.
Source: Bank of Canada; Better Dwelling.
Canadian mortgage credit remains astronomical in contrast to the size of its economy. Outstanding mortgage credit climbed 0.50% (+$10.98 billion) to $2.19 trillion in June. The balance has climbed 3.45% (+$73.18 billion) since last year, a huge number in dollar terms, but a sharp pullback from the month prior.
Canadian Mortgage Credit Is Growing At An Unusually Slow Rate
The annual change in the balance of residential mortgage credit owed by Canadian households.
Source: Bank of Canada; Better Dwelling.
Annual growth remains unusually low for Canada, and may be heading lower. The 3.45% rate reported in June was slightly smaller than the month prior, and sits just 0.05 points above January’s multi-decade low. Just five months ago, annual growth advanced at the slowest rate since 2001—and it may head even lower.
The BoC’s first cut in this easing cycle occurred at the start of June, but didn’t provide much in terms of credit. In fact, some may recall that annual growth advanced in May ahead of the cut, only to pull back in the following month. The increase may have been noise, as FOMO buyers rushed to get ahead of any anticipated boom from cheaper credit, however, that boom didn’t materialize in June.
Experts are divided on whether the recent rate cuts are enough to stimulate borrowing. When delivering the cut in July, the BoC explained they anticipate an increase in residential investment (a.k.a. real estate investment). They didn’t quite clarify why though, and it might be worth remembering a part of the BoC’s job is to manage expectations—stimulating borrowing when it’s weak.
At the same time, other experts don’t see a near-term borrowing boom after recent cuts. Affordability is so stretched that Big Six Bank economists don’t see cuts this year doing enough to pick up the market. Either prices need to come down, incomes soar, or rates need to be slashed a lot more before it stimulates new buyers. As a result, no significant boost to demand is expected until next year.
Mortgage requests are down, not many if any trusts the current system or the BOC after the rug pull starting in 2022. Now they have held restrictive policy for too long and are fudging numbers- we are bordering on a depression and already been in recession for well over a year. Most know when they look in their bank account and wallet and are forced to decide pay bills or eat.
The capital gains tax with headway given to those that could move their money and avoid…is a total flop PBO says only 40% of what was expected came in. That means, this regime is broke and next surprise will be home equity tax bc the middle class is taooed out and has nothing left to give. Disastrous regime that has bankrupted the Country.
girls got to eat.
Don’t try to overthink this. I have seen this many, many times since 1977 when I started my real estate career. When rates start falling is when most people wait to tie into a mortgage when rates they think have bottomed out. BOC doesn’t even know how low they will have to go. Most experts say a long way yet. Most people renewing now will go short term or variable. If most people think rates are coming down a lot more, they will wait to buy or borrow more. Why go 5 yrs now at 5% when a yr or so from now you will probably see 2.5%? Lowering interest rates and easy money are the only tools the BOC has to fight a recession.
2.5% in a year? economy would be dead for rates to go that low
Certain markets outside of BC and Ontario will continue having sellers markets as prices go up where people go. And people will move out of the expensive areas in greater numbers as they sell out and move to more affordable locations. This population relocation will drive prices higher in the Prairie provinces, Quebec, NB mostly. Halifax imho is already too expensive. Toronto will continue to lose record numbers of people. Most people in Canada still do not know there are places in Canada, say like Edmonton, Red Deer or Lethbridge where a family can buy a very nice detached house on its own lot for between $300,000 and say $500,000. I just sold a rental property 5 bedroom in Red Deer in a very desirable location for $329,900. A family can actually live here, raise kids and prosper unlike most places in Ontario or
BC.
NOBODY WANTS CANADA. NEW USA HOMES ARE 400K OR LESS. CANADA IS COOKED FOR 20 YEARS. NOBODY COMING.
TURN OFF THE LIGHTS – THE PARTY IS OVER.
Yes houses there come with a free gun, nightly shoot outs, a picture of Trump and a medical bill worth more than the house.
Here is a better solution than buying in America.
Sell that over priced 1 million $ home and buy 7 to 8 properties in your home countries for that money. Live off in one and rent all the others. Indian and Pakistani immigrants in UK are doing just that. Some Brazilians too. This has caused real estate prices in those countries to increase significantly over the last year and the trend will continue as reverse immigration goes from a trickle to a flood.
Hurry before it is too late. The one who panics first, panics the best.
So we sawmortgage debt in Canada rise from 1.1tr in 2017 to 2.1tr in 2023? So in 6 Yeats the total mortgage debt doubled in Canada?
Now the BoC and the bankers who’ve been selling this nonsense about supply issues driving prices up are faced with a serious problem. Yes finding a reasonable home that you can afford is hard, so that supply is hard to find, but that’s a PRICING PROBLEM not a supply problem?
So I. Wffect Freeland and co have wasted several hundred billion dollars on a fallacy? The issue was never supply, it was always price.
Even worse, Freeland can’t even say that the inflation in 2022 had anything to do with her ukraine war nonsense, as it is clearly the result of idiotic lending and govt acquirsence to that lending. So not only did they break the housing market, they also caused the cost of living mess were are all living theough?
SO WHEN WILL DEMAND COME BACK? ONCE PRICE HAS RETURNED TO AFFORDABILITY AND THE LIBERALS STOP TRYI G TO KEEP IY AT THESE PRICES.
Canadians selected incompetent politicians. How much taxes/fees on a new built house? People will suffer if we’ll not reset this beautiful Canada.
There is no resetting this mess. A cataclysmic event is required to shake society to its core and only then the rebuilding can begin.
A perfect storm has arrived.
– Skilled and experienced boomer generation retiring en masse and being replaced by rookies and a demoralized workforce.
– Expensive commodity and labor prices that make rebuilding phenomenally expensive.
– Productivity crisis mainly due to a demoralized workforce and lack of succession planning.
– High indebtedness that will continue to increase as interests compounds. Time is now the enemy.
– Foreign exchange rates that will skew the benefit towards developing and emerging markets. Interest rates will have to go higher to defend the currency causing even more indebtedness.
– Loss of western prestige that will embolden and cause even tiny nations to reject hegemonic treaties and rules.
– Competition for skilled immigrants that will cause a brain drain from Canada compounded with reverse immigration.
– Fires, floods and hail.
And much more. It is all coming down now……….
On a positive note, we do have free health care, lots of wood, water and of course our expensive houses.
It’s not just “taking the summer off” it’s just unaffordable to live in Canada. Home prices will be stagnet for the next 10 years to catch up to inflation.
Everybody here talks like they believe Canada’s real estate market is all the same. If you believe that you deserve to be poor. There are regional markets that are much more affordable than ones in Ontario or BC. You do not have to leave the country to prosper and live a good life. We moved an 11 hour drive away from the lower mainland to a resort style lakeside community and bought a spacious upscale townhouse for under $250,000. We could have bought 7 of them all cash from the proceeds of our family house sale. Sure prices are up here too but only about 70 to 100000 in 2 yrs. Central Alberta, located 90 minutes from 2 cities with populations of about 1.5 million each and less than 90 minutes from 2 major international airports is very convenient. Lethbridge is also a nice place to move to. Many people from BC and a lot more from Ontario have also seen the light and more are sure to follow. I have lived in various parts of Canada and when weighing all the economic, social and other differences , especially taxation -Alberta wins hands down. It does get cold in winter for sure but Toronto, Vancouver, Quebec, NB., NS., and even BC are not offering up tropical climates in the winter either. I have spent winters in all of these places. Kelowna in the dry hot Okanagan gets very cold in the winter too. If you want warm winters then I suggest you move to Florida, Mexico or other points south.
2.5% mortgage rates are only 1.9% lower than the best 5 yr rate is right now. As for the economy being dead for that to happen – give your head a shake. Prices have to go up for developers to build those 4 million homes that are needed. Nobody builds them to lose money. Profit is the great motivator. There isn’t enough taxpayer money available to finance this – investors have to fund it and lower rates are needed to attract private investment. A huge piece of the Canadian economy is based on housing and construction and things to bad in BC and Ontario so as usual extreme measures will be taken by our reactionary federal government. At least until they get the boot in Oct. 2025.
National security, law and order are also a great motivator. If profit driven builders won’t build them, then the government can build large scale subsidized housing. Has been done in the past. An effort of the scale of the “manhattan project” is required to ensure this country remains viable.
And if the government builds :- who is paying for these subsidized homes? You, me and every other taxpayer. Talent in government is not in the construction field. Government builds nothing people build homes and investors finance homes and profit is a great motivator. Nobody works for nothing and the only thing that government can do is provide the conditions and the incentives for investment and development of housing. They do nothing except collect taxes and campaign for reelection. Although there are a few exceptions in Alberta and Saskatchewan.
Lol. Had to laugh at your naivete. I am sure it was unintentional.
If a government, the central bank and its cronies can print billions to create an artificial floor under the real estate market by purchasing up mortgage backed securities AND also keep rates low enough to juice it AND bringing in more immigrants than there is housing supply, then the same government can also just print more billions to build massive subsidized supply when it has the will. Has been done in the past (post war) and can be done again, specially, when the so called “free market” generates a feudal class that becomes parasitic enough to cause social decay and despair among the younger tax paying base. Just a matter of when the cup tips over for it to act to prevent a national emergency. Read the RCMP report on how close we are to the tipping point.
https://nationalpost.com/opinion/secret-rcmp-report-warns-canadians-may-revolt-once-they-realize-how-broke-they-are
Btw, taxes paid by the plebs are just a charade to provide an illusion of normalcy. In modern monetary theory, nothing happens based on what the debt slaves pay in taxes. The big money for the big projects is “printed” out of thin air under cover of excuses such as Covid, subprime, GFC, etc. By now, this should have been clear to anyone.
My family is one that exited the expensive Kelowna market last year. We decided on Medicine Hat. The smokeanagan lost its charm. Unrealistic growth with multiple 43 story towers and no planning for growth. Love the Hat everything is more affordable and a City that has had its own gas company for years. It provides us electricity, natural gas, and water of course. Average monthly cost for all 350/ month. Next year’s municipal tax increase estimated at 5%. Our home has went up by 70k in one year as the real estate market is extremely hot here. We could use the win fall from selling out of BC to pay off the mortgage we transferred but why. It was 5 year at 1.79%. have tell 2026 to see what happens. So far the invested money has done well through RBC. Miss our friends but don’t miss Kelowna and the NDP. Hope the rest of us Canadians vote for the common sense party Federally cause Justin has messed things up just like his Dad. Hang in there baby boomers and let’s hope AI can work wrenches and equipment that all of us set down to retire. See you soon in Alberta. Cheers.
Well medicine hat guy you made a smart move. Sorted me and my family we might have moved earlier than you in 2022 from the Lower Mainland. Cashed out at prices much higher than they are today. Spent 1/7 of what we got for our house on very nice townhouse in a very very nice place. I’m sure there are many others coming our way so be prepared heaven doesn’t last forever if you get pretty bad here in the next 10 years too from the influx of all the people headed our way. Enjoy it while you can.