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.

10 Comments

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  • Kate 2 months ago

    This is pathetic.

  • Ray 2 months 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.

  • Mark Bayly 2 months 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

    • Ryan Frouws 2 months ago

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

    • Sharon Sommerville 2 months ago

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

    • Average Man 2 months ago

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

  • Dan 2 months 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

  • Lins 2 months ago

    They have to hold it for a few years now.

  • Leo the lion 2 months ago

    The USA doesn’t have the same problem today like we do as housing doesn’t control people’s lives and rent and the USA market isn’t as sick as the Canadian rental market and realstate brokers and agents. This Canadian problem is not beholden to major Canadian cities, Nova Scotia is a prime example of the pure greed that has zapped all its charm away gone gone gone. NS now has Toronto like rental prices in towns with less than 5k people. Houses that couldn’t sell in 2019,18,17,16,15 on and on have now tripled and more in the last two years. People out of province and country bought these houses at grossly inflated values and now run airbnbs with them the landlord’s don’t live in NS or Canada depending. The NS government changed their policy to encourage this. Nova Scotia real estate has been taken hostage and the hard working blue collar renters are being handed their hat. Cattle sale indeed. The policy here is bring in new young Canadians and move those middle aged workers out who know can’t afford or support this latest business model. Consolation prize for signing up is no doctor for the rest of your life, no transit, infrastructure failures everywhere ie flooded basements once every two years not covered by insurance. Perhaps Canada should have taken it’s medicine in 2008 as well because now the powers that be can’t let housing markets correct because it will take the country down with it. I heard that jingle these last two years. But I don’t believe it, I for see jingle mail making a massive comeback.

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