Canadian mortgage credit continues to slow as rising rates grind the market to a halt. Bank of Canada (BoC) data shows outstanding residential mortgage credit rose in November. However, it was one of the slowest months we’ve seen since 2020. Annual growth remains robust, but recent activity is bringing the trend lower.
Canadian Mortgage Debt Topped $2.08 Trillion… Just For Housing
Canadian mortgage debt is still climbing, despite being a monumental pile. Outstanding residential mortgage credit reached $2.08 trillion in November 2022. The balance added 0.3% (+$5.9 billion) in the month, and is 7.6% (+$147.5 billion) higher than last year. It’s a record high balance, but after hitting new highs for 131 months? That’s hardly news. A big change in the monthly growth pattern? Now that’s interesting.
Canadian Mortgage Debt Hits A New Record High
The outstanding balance of Canadian residential mortgage credit owed to institutions.
Source: Bank of Canada; Better Dwelling.
Canadian Mortgages Had One Of The Slowest Months Since 2019
Monthly growth showed a minor improvement, but it’s fairly anemic for Canada. November’s growth (0.3%) was slightly higher than October (+0.2%), but not by much. Outside of these two months, monthly growth hasn’t been this low since 2019.
Annual Growth Is Slowing, But Remains Very High
Of course, those slow months are following some of the biggest growth ever seen. Since peaking in February 2022, annual growth has slid nearly every month. With November coming in at 7.6%, it’s still very, very high growth for debt to accumulate.
Canadian Mortgage Debt Growth
The annual growth rate of Canadian residential mortgage credit.
Source: Statistics Canada; Better Dwelling.
Annual growth dropped to the lowest rate since February 2021, though that was still high. Prior to the pandemic, we hadn’t seen mortgage credit accumulate at this rate since 2011. Back then, the pile was nearly half the size and much easier to grow. Now we’re talking about a mortgage debt pile around the size of Canada’s GDP, growing at more than double the rate. Even a much lower rate than the peak is problematic from an economic growth standpoint.
Higher mortgage rates played a big part in slowing growth, as it reduced leverage. However, mortgage rates might be close to reaching a peak this cycle. The Government of Canada (GoC) 5-year bond yields have been rapidly declining. Since the GoC 5-year yield directly influences 5-year fixed rate mortgage interest, those mortgages should be coming down as soon as the risk premium subsides.
Just remember that cheaper credit doesn’t mean pandemic-era, emergency rates. Experts don’t see a surge in demand, or rising home prices, for at least a few years.
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Criminal bankers! Go to hell! I’ll be exposing everything! Canadian banks laundering millions per day! Deutsch/Royal Bank covered bonds scam!
Please give me the chance to comment. I finally decided to try commenting again since my comments always get deleted. I also stopped reading the website because of it.
2 trillion CDN or 1.5 trillion USD with the current exchange rate is a lot but if any of you were wondering how it compares to the US it’s pretty close. Currently the United States has 11.7 trillion in mortgage debt. Furthermore, Canada’s population compared to the US is about 38.5 million compared to about 332 million so the US has about 8.6 times the population. So it’s like Canada having roughly 12.9 trillion which is 10% more mortgage debt per capita.
Inflation is going to absolutely kill. The damage is done and now everyone will pay… and pay and pay.
Need another 6 months and the borrowers from 1H 2019 will start to get nervous.
Co-worker with 800k rebuild of their house in Barrie on variable have their monthly mortgage payments double from 2800/mo to almost 6k/month. They have renewal coming up. Reality is setting in. Good thing they 5 years worth of equity and an new house price to fall back on.
More pain to come.
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