Canadian Mortgage Credit Is Growing At The Fastest Rate In Almost 2 Years

Canadian mortgage debt had a strong start to the year. Bank of Canada (BoC) data shows outstanding mortgage credit reached a new high in January. Mortgage credit is now growing at nearly the rate it was before stress testing was introduced.

Canadians Now Have Over $1.63 Trillion In Mortgage Debt

Canadian mortgage debt ripped to a new record high at the beginning of this year. The outstanding balance of mortgage credit reached $1.63 trillion in January, up 0.2% from a month before. This represents an increase of 5.1% when compared to the same month a year before. Mortgage credit outstanding is now at a record high for dollars, and is experiencing robust growth.

Canadian Outstanding Mortgage Credit

The outstanding balance of Canadian mortgage credit.

Source: Bank of Canada, Better Dwelling.

Growth is still picking up, and is now the highest it’s been in months. The 5.1% 12-month increase in January marks the tenth consecutive month of acceleration. It’s now at the highest rate of growth since February 2018. This acceleration of growth is likely to rise in the near term.

Short-Term Growth Slows, But Still Points To Stronger Annual Growth

Short-term growth printed a big slowdown, but it’s still enough to push annual levels further. The 3-month annualized rate of growth reached 6.1% in January, a little lower than the 6.7% we saw a month before. This tells us near-term we’ll see the 12-month growth rise. The drop in the 3-month growth indicates we’re getting closer to seeing the rate stabilize.

Canadian Outstanding Mortgage Credit Change

The 12 month percent change, and 3 month annualized change, of outstanding Canadian mortgage credit at large institutional lenders.

Source: Bank of Canada, Better Dwelling.

Canadian mortgage credit is now seeing growth at levels not seen since the introduction of B-20 Guidelines. The throttling of mortgage capital led to an abrupt decline in borrowing. However, the market is now just a few bps under a full recovery. Just in time for B-20 Guidelines to be adjusted, to allow bigger mortgages.

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4 Comments

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  • Trader Jim 4 years ago

    The 3-month is dropping because it’s outside of the window of the Sept/Oct acceleration.

    Probably some carry over and new money into the spring, but hard to see 2017 levels of growth returning.

    • Joseph 4 years ago

      Trader Jim, if you had to guess, what do you see the Spring looking like?

  • Dave 4 years ago

    Corona virus fears have  money going into bonds, sending their prices up and their yields lower.

    Fixed rate mortgages are based on bond yields so the market will be lowering rates for fixed rate mortgages long before the BOC needs to even think of lowering the overnight rate that is used for variable rate mortgages.

    Spring time in Toronto will see the return of ridiculous bidding wars and massive price increases. 
    The insanity still has a ways to go.

    • alvi 4 years ago

      Yeah The february single detached homes sales appear to be very strong, buyers are not waiting for the spring. The only risk to the market right now is if the economy completely rolls over like in 2008 and does not recover as quickly as it did that year.

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