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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