Canadian Mortgage Debt Tops $2 Trillion, Likely To Soon Eclipse Size of GDP

Higher interest rates are slowing mortgage borrowing but debt is still growing fast. Bank of Canada (BoC) data shows outstanding mortgage credit climbed in May 2022. Falling home sales are beginning to erode the pace of borrowing. Even with the minor slowdown, mortgage debt is likely to surpass the size of GDP soon.

Canadian Mortgage Debt Is The Equivalent of 98% of GDP

Canadian outstanding mortgage debt is reaching astronomical levels. Households owed $2.01 trillion of residential mortgage debt in May. It was 0.9% (+$17.4 billion) higher for the month, and 10.1% (+$185.0 billion) above the balance last year. It sounds like a lot of debt, but just how big is it? Mortgage debt is now 98% the size of GDP at basic prices. 

Canadian Residential Mortgage Debt

The outstanding balance of Canadian residential mortgage debt held by institutions.

Source: Bank of Canada; Better Dwelling.

Annual Growth Is Slowing But Still Remains Unusually High

Mortgage growth is slowing but remains very high. Annual growth for May is 0.8 points lower than the peak reached in February 2022. Prior to 2021, annual growth hadn’t been this high since 2008, so this isn’t exactly slow per se. It’s just slower than it was over the past couple of years. Being nearly the size of GDP and growing at multiples of the rate, mortgage debt should eclipse GDP soon.

Canadian Residential Mortgage Credit Growth

The 3-month (annualized) and 12-month rate of growth for Canadian residential mortgage credit.

Source: Bank of Canada; Better Dwelling.

More Recent Growth Shows Home Price Growth Is Slowing

The 3-month (annualized) trend confirms recent growth is largely decelerating. Typically this growth cycle bottoms in February and peaks from June to August. Since the 3-month annualized growth rate was only at 9.0% in May, it’s unlikely to see it surge past the 14.1% seen in June 2021. Lower highs and lower lows are a textbook indicator of a slowdown already here. Indicators are just lagging.  

Research shows mortgage debt rising above 70% of GDP leads to reduced output. This is problematic for Canada, considering it’s about to overtake GDP at a much faster rate. The brief boost the economy received from the boom is likely to turn into a long-term drag.



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  • J 2 years ago

    Rrrrrrrrrrecession is in the books. A conservative forecast for a 15% drop in housing prices. Throw in a domino effect for every sector propped up by pandemic housing binge to game the GDP growth numbers. Not going to be pretty. The only consulation is all the businesses looking for workers will get some when jobs in the housing sector(s) are elminated.

    -Globe and Mail article from March 2022-

    Residential investment, as a share of nominal gross domestic product, soared to about 10 per cent at peak times over the past two years, amounting to more than $240-billion in 2021. That’s up from about 7 per cent of GDP before the pandemic – or double the equivalent rate in the United States.May 18, 2022,rate%20in%20the%20United%20States.

  • David Todtman 2 years ago

    Danial: thank you again for helping us track these housing/finance issues. I would appreciate it if you had a reference to this: “Research shows mortgage debt rising above 70% of GDP leads to reduced output. ”

  • Ron Bruce 2 years ago

    Better Dwelling March 2021: “Too much residential investment can signify excess and/or misallocated capital. The more capital devoted to just WAREHOUSING people, the slower the economy grows. It also becomes challenging to move those investment dollars into new industries without an issue.”

    Warehousing people, instead of investing in innovation, new technologies, or intellectual property, take third place when competing on the Global Stage. Real Estate speculation has proven to be a better investment for the majority. When 1/3 rd of the population works in tax-paid Government jobs, industry innovators should search for other Countries offering investment and talent pools of innovation (low-cost producer) and affordable housing costs.

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