Canadian Mortgage Debt Is Growing At The Fastest Rate Since 2018

Canadians are over pandemic spending fears. At least when it comes to getting mortgage debt. Bank of Canada (BoC) data shows the balance of outstanding mortgage credit reached a record high in September. Despite the pandemic, mortgage debt is now growing at the fastest rate since 2018.

Canadians Owe Over $1.7 Trillion In Mortgage Debt

The balance of mortgage credit reached another all time high. The balance hit $1.71 trillion in September, up 0.89% from a month before. The increase represents a rise of 5.67% when compared to the same month last year. It’s a record high, during a pandemic, but record balances are hardly surprising anymore. What is surprising is the rate of growth. 

Canadian Outstanding Mortgage Credit

The outstanding balance of Canadian mortgage credit.

Source: Bank of Canada, Better Dwelling.

Mortgage Debt Sees Highest Growth Since 2018

The annual rate of growth abruptly changed direction, and is now at a record high. The 5.67% increase from 12-months ago is the highest growth since March 2018. It’s somewhat surprising since growth had been decelerating since May. It’s going in the totally opposite direction at this point – and fast.  

Canadian Outstanding Mortgage Credit Change

The 12 month percent change of outstanding Canadian mortgage credit at large institutional lenders.

Source: Bank of Canada, Better Dwelling.

Higher Growth Prints Are Expected Near Term

The annualized short-term trend shows this rate is expected to push higher. The 3-month annualized rate of growth reached 7.0% in September, up from 4.93% last year. This kind of short-term acceleration was only recently higher in March and April of 2018. Other than that, we’d have to go back almost a decade to see this kind of growth.

One higher growth print doesn’t mean a trend has reversed, but it was very abrupt. Last year’s comparison period was a little slower than usual. This may indicate there wasn’t just pent up demand from the shutdown during the pandemic. It may also indicate last year’s credit slowdown was delayed buyers, who are now rushing to jump in. Whether the trend persists won’t be clear until we see some winter data points. 

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  • Ottawa Resident 10 months ago

    Sellers that would normally be “motivated” have to hold out because they’re on deferrals. Inventory is being pent up, while mortgage credit allowance is inflating. This is going to be a double wave decline/recovery IMO.

  • Ian 10 months ago

    0.99% rates. How can this not rise more?

    • Whiskey Foxtrot 10 months ago

      First time buyers ain’t getting that rate. It’s a lot of people that were waiting for a condo, then decided to buy detached instead because rates were so low. Kind of funny tbh.

  • Bob Walter 10 months ago

    Borrowing is basically pulling wealth out of the future.
    Since 2000 mortgage debt has what, quadrupled and some?
    Debt is going to have to be paid off.
    If they keep this up its going to be a very poor future indeed.
    People will have already spent their 1.7 trillion.

  • The Truth Shall Set You Free 10 months ago

    In the words of Al Jolson and Gus Kahn, “You ain’t seen nothing yet”. This is just the beginning. The piece written and published last week by BNNBloomberg (November 30th, 2020) is an eye opener as to what’s happening. The last three paragraphs of that pieces state the following:

    “The low delinquency rates we’re currently seeing are likely being masked by deferral programs,” Oakes said, adding deferral programs saw uptake from over three million consumers since the start of the pandemic.

    “There are some warning signs in early-stage delinquency on credit cards where consumers have missed one or two payments that we’re closely monitoring.”

    According to Equifax, 12 per cent of new credit products in the third-quarter were opened by consumers who took advantage of a deferral program.

    There is a major correction coming. Let’s just hope it’s a civil collapse and not a free fall to the bottom.

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