Canadian Mortgage Credit Grinds To A Halt, Slowest September In Two Decades

Canadian mortgage credit had an unusually slow month, as the hangover from higher rates starts to settle in. Bank of Canada (BoC) data shows consumer mortgages debt continued to decelerate in September. Higher rates and weak home sales combined for the slowest September in two decades.

Canadians Owe Over $2.1 Trillion In Mortgage Debt

Canadian mortgage debt surged to a new record, which is hardly a surprise. The outstanding balance reached $2.1 trillion in September, up 0.3% ($6.4 billion) in the month. Compared to last year, the balance is 8.5% ($161.3 billion) higher. As big as those numbers sound, things are actually grinding to a halt. 

Canadian Residential Mortgage Debt

The outstanding balance of Canadian residential mortgage debt held by institutions.

Source: Bank of Canada; Better Dwelling.

Canada Hasn’t Seen A September This Slow In 20 Years

Canadian mortgage debt was strangely slow when it came to monthly growth. In dollar terms, it was the smallest advance since February 2020. It was also the slowest September since 2002, back when the Iraq invasion was first getting started. It’s been a looong time. 

Annual Mortgage Growth Has Peaked

The slowdown is wearing away at the annual trend as well, though it may seem high. Annual growth peaked at 10.8% earlier this year, and decelerated to 8.5% in September. It would normally be a very large number, but adjusting for lofty inflation it works out to just 1.6 points of growth. It’s also slowing much faster than inflation is these days. 

Canadian Residential Mortgage Credit Growth

The 3-month (annualized) and 12-month rate of growth for Canadian residential mortgage credit.

Source: Bank of Canada; Better Dwelling.

Canadian mortgage growth is predictably slowing as higher interest rates throttle credit. Smaller mortgages and fewer home purchases are intended consequences to slow excess demand. This is likely to continue through at least the first half of 2023.

8 Comments

COMMENT POLICY:

We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Reply
    Kate 6 days ago

    This is pathetic.

  • Reply
    Ray 6 days ago

    They’re planning on bringing in over 2 million people into the country. Does anyone actually believe they’re bringing in all wealthy people who can afford these ridiculous prices. They’ll be tents everywhere if these prices remain. Their whole goal is to decimate the resl estate market to bring it down to levels of 20 years ago.

  • Reply
    Mark Bayly 5 days ago

    People in Canada consistently vote for left wing governments and this is what happens when you print and borrow money for 40 years to pay your bills. Even the conservatives are a left wing party This mess is just beginning

    • Reply
      Ryan Frouws 5 days ago

      agreed. the only way out is massive devaluation of the dollar.

    • Reply
      Sharon Sommerville 5 days ago

      Could you expand on the idea that Stephen Harper’s Conservative Party of Canada is left wing?

    • Reply
      Average Man 4 days ago

      Or you raise taxes to actually pay for stuff with money.

  • Reply
    Dan 5 days ago

    the new 2 million immigrants are coming to work at tims, mcds, and labour jobs as baby boomers retired and we need skilled hands on workers, they dont have any money to buy 1 million dollar shacks. Get Real.
    Let the housing crash to affordable levels like in 80’s

Leave a Reply

Your email address will not be published. Required fields are marked *