Canadian Mortgage Debt Growth Is Finally Back To Early 2020 Levels 

Canadian mortgage debt is finally returning to normal just a year after rates began climbing. Bank of Canada (BoC) data shows households continued to slow down on the mortgage credit borrowing in March 2023. The growth rate has now returned to levels more typical of the 2010s—back when people thought they knew what a frothy real estate market looked like. 

Canadians Owe $2.1 Trillion In Mortgage Debt

Canadian mortgage credit is returning to healthier and more typical levels. Households pushed the outstanding balance 0.2% (+$3.8 billion) higher, pushing the total to a whopping $2.1 trillion in March. While the total is astronomical, March’s growth came in at a third of the rate seen last year, and a quarter of the rate in 2021. It was an unusually slow March—the slowest since 2018. 

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 Mortgage Debt Sees Growth Slow To Early 2020-Levels

March was a part of a broad trend of slowing mortgage borrowing. The balance is 5.4% (+$108.2 billion) larger than the same month last year, which is still a substantial amount of growth. Especially with a balance as large as we’re seeing. However, the annual growth rate is still the lowest since January 2020, and returned to pre-March 2020 levels for the first time since rates were first cut. 

Canadian Mortgage Debt Growth

The annual growth rate of Canadian residential mortgage credit.

Source: Statistics Canada; Better Dwelling.

Higher Interest Rates & Fewer Sales Are Dragging Growth

The mortgage growth deceleration trend is driven primarily by higher interest rates and a low volume of sales. Higher interest rates intentionally slow activity to moderate price inflation, and they’re definitely slowing credit demand. Falling fixed rate mortgages are working against the trend currently, but in general there’s a drag on mortgage debt growth.  

Home sales are also working against mortgage credit growth. Despite showing some improvements over the past year, home sales remain relatively slow in contrast to historical volumes. Improving from last year isn’t quite the same as a normal market, which is yet another drag on mortgage credit. 

Canadian mortgage credit growth is slowing, but slowing doesn’t mean slow. It’s a level of growth that would have been considered strong prior to 2020, a period not exactly known for a real estate slump in Canada. 

7 Comments

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  • Ray 9 months ago

    They say only a third of Canadians have a mortgage. So this third owes $2.1 Trillion in mortgage debt 🤔 😳 😐

    • J 9 months ago

      2,100,000,000,000 / (13,000,000/3)= iPhone calculator ran out of Zeros.

      2,100,000 / (13/3) ~=485,000 average mortgage balance.

      Skew that by time and duration of amortization. The people who bought in the past five years are going to be cleaned out.

      How many can hold on when JP raises rates to defend USD?

      CAD devaluation = more inflation.

      Recession = rate cut = HB 3.0 = more inflation.

      June 1st US debt ceiling ??? = Disaster globally.

      BoC caught between a bunch of loaded guns.

      • Keops 9 months ago

        At that point the boc will decide to either make Canadians poorer by devaluing the dollar, or make Canadians poorer by hiking interest rates and crashing real estate value. A tricky choice.

  • david 9 months ago

    Mortgage debt growth is still more than twice the GDP growth and it has been like that for the past 20 years. The current growth is not what i call sustainable.

  • Daniel 9 months ago

    I wonder the size of the inflationary effect of people who have given up on saving for a home and just spend their money in the economy. Will that contribute to rates that are higher, for longer?

    I wish I was able to buy a house before this craziness. I became able to buy one, but now it’s unappealing… Why would I put hundreds of thousands into a grossly overpriced asset and then have to spend much more time and money for upkeep + cost of mortgage? I’ll just keep investing in less overpriced stocks that have much lower upkeep + more flexibility.

  • cto 9 months ago

    houses = bricks of gold!
    they are the primary Canadian financial instrument.
    They used to be homes for shelter but now they are gold bricks and not a soul wants to sell their lovely brick of gold.
    THANKS BoC!
    THANKS GOVERNMENTS OF ALL LEVELS AND THIER ELECTED REALESTATE INVESTORS.
    YOU HAVE CHANGED HOUSING AND CANADA. TO SUITE YOU CONFLICT OF INTEREST.

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