Canadian Mortgage Growth Falls To The Lowest Level Since The Dot-Com Crash

Slowing Canadian real estate sales are cooling off mortgage growth very quickly. Bank of Canada (BoC) numbers show mortgage credit growth continued to decelerate in September. The annual pace of growth for outstanding mortgage credit is now at the slowest pace we’ve seen in 17 years, and on track to go lower.

Canadians Owe Over $1.53 Trillion In Mortgage Credit

Canadian mortgage holders managed to push outstanding mortgage debt to a new high. The balance of mortgage credit reached $1.53 trillion in September, up $3.34 billion from the month before. That puts the outstanding balance up 0.21% month over month, and 3.4% higher than the same month last year. The impressive record prints may be coming to an end soon though, with growth continuing to fall.

Canadian Outstanding Mortgage Credit

The outstanding balance of Canadian mortgage credit at large, institutional lenders.

Source: Bank of Canada, Better Dwelling.

Canadian Mortgage Growth Falls To A 17 Year Low

The outstanding balance may be a record in size, but it’s growth is tapering fast. The 3.4% annual pace of growth is now the slowest it’s been since June 2001. As mentioned last month, the last time it was this slow the BoC cut rates by 100 bps. A cut is off the table right now, since the central bank reiterated they are moving to rate normalization. That would need rates to rise at least another 50 bps, eliminating another ~6% of mortgage buying power. Even without the hike, these numbers were heading lower.

Canadian Outstanding Mortgage Credit Change

The 12 month percent change, and 3 month annualized change, of outstanding Canadian mortgage credit at large institutional lenders.

Source: Bank of Canada, Better Dwelling.


Canadian Mortgage Credit Pointing To Lower Growth

Record low growth is on pace to go lower, looking at the recent trend – without a rate hike. Annualizing the past 3 months of growth is a common way to check where growth is heading. It sounds hard, but we’re just taking the 3 month of previous data, and projecting it as though it were the whole year. If it’s above the annual rate, expect growth. If it’s below, expect it to shrink further.

The current 3 month annualized pace of mortgage growth shows we’ll be slower next month. In September, the 3 month annualized rate of growth reached a paltry 1.4% – significantly lower than we’re at now. Since it can’t grow without this number being higher than the annual pace, expect it to fall further. We would need to see at least one month higher than the annual pace for the reversal to announce itself.

Mortgage growth slowing shouldn’t surprise anyone watching the numbers. Higher interest rates and working towards rate normalization is enough to drag growth. Throw in tighter lending, and lower sales, and we’re surprised it’s as high as it is.

Editor’s Note: Investors and credit analysts are going to want to brush up on how this fits into the credit cycle.

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  • Helpdesk 5 years ago

    the private second mortgage space is heating up.
    There are a lot of people that did not make a plan and therefore need a 6 month interest only loan at 9.99% + fees.
    Pretty safe to assume that 1 out of 4 homes you see for sale in this market are people in serious or desperate financial situations.

    • Yusef G 5 years ago

      Especially around the GTA. 1 in 10 dollars used for a mortgage is now a private lender. Which puts them at a 7.5% interest rates from when I last checked. It’s pretty hard to build equity in a home when you’re paying more than that, then add TMI and you’re betting on the market soaring higher and longer than almost any real estate market in history.

    • Mtl Matt 5 years ago

      9.99% annualized? I would only make that loan out with house as collateral if they aren’t too close to being underwater.

  • Mortgage Guy 5 years ago

    This was before all of the banks hiked rates last week. This is going to be interesting.

  • Will 5 years ago

    Mortgage growth falling is no big deal. Has no impact on prices. You’re not going to sell your house for less than you paid.

    • Oakville Rob 5 years ago

      Will – people may sell for less than they paid if it’s not their primary residence.

      To escape bankruptcy, foreclosures, or collections the new selling goal will be to save their credit rating rather than massive profit.

      That decision will be made when (hopefully before) they run out of money to carry it.

      As such they may walk away from their equity to shed the debt and chalk it up to a bad investment.

    • Mtl Matt 5 years ago

      > You’re not going to sell your house for less than you paid.

      No, but the bank will.

    • @xelan_gta 5 years ago

      Will, tell that to those sellers:
      “Another 122 properties were bought and sold in the same year for an average of $107,325 less”

      Some sellers will definitely wait.. until recession arrives.

      • someguy 5 years ago

        Poor realtors:

        “It’s not just the buyers and sellers who are affected. It’s the realtors who already work crazy hours, then don’t get paid,”

        I also learned that one probably shouldn’t agree to buy a $2M investment property without getting one’s ducks in a row first. Whew, close one!

    • Investor 5 years ago

      Yeah right! When you buy speculatively, there’s an expectation that prices will increase – that’s the motivation for buying speculatively. If speculators are noticing signs that they stand to gain nothing; they will definitely sell to take cover and minimize losses. That process triggers a price decline. Even developers are dropping their pre-sale prices and some who committed earlier are getting burnt.

    • ken 5 years ago

      Will is making this up off the top of his head obviously, according to what he wants to believe, not what is factual.

    • Victor 5 years ago

      Yes, sure… Tell this lucky owners of 1204 Islington Ave who bought it for 1.5M in March 2017, a month later since it was originally listed to 1.75M. 250k less is not a bad deal. But 5 months later something happened and they put it for sale for what they paid – 1.5M. It is still not sold since Aug 2017 and after 6 reductions it is listed for 1.2M. If you do not believe then register at and open Listing History for that house.

      • sasha 5 years ago

        dont think the deal went through, title was never transfered, as of March 2018 the house was listed as power of sale.

  • Kelly Choi 5 years ago

    Scary how quickly people changed their mind. I guess they also changed their mind about the city not having so many immigrants we’ll have to stack them in little takeout boxes.

  • Greg Tremblay 5 years ago

    Immigration is at record highs, especially in Vancouver. Each one of these immigrants needs to decide if they’ll rent, or buy a new home. There are no rentals, so home sales will have to rise soon. You can’t hold out forever.

    • SMH 5 years ago

      That’s silly, “You can’t hold out forever”. The reason people aren’t buying homes is because they’re simply too expensive. If you can’t afford to rent, you sure as hell can’t afford to buy. It’s not that people are “holding out” for a better price, the prices are astronomical and out of reach, completely out of whack with fundamentals. Even the people who “own” the homes can’t afford them, so we’ll see who can hold out longer. And don’t even get me started on Will’s comment *rolls eyes*.

      • @xelan_gta 5 years ago

        Exactly. Sellers think it’s a waiting game “sellers vs buyers”, but there are really no buyers on the other side of the fence. Buyers are squeezed out of the market and physically can’t afford real estate at the current price levels.
        With more rate increases coming the pool of buyers will shrink even further.

        Looks like Vancouver sellers finally realized that and market is flooded with inventory now.

    • Jon Tario 5 years ago

      I’m not sure you realize that the majority of immigrants are probably not being paid enough money to afford homes at current prices. This is anecdotal but I am an immigrant making a salary that puts me well into the top 10% of households and not far off from 5%. Guess what? I am renting. I will rent until home prices drop by at least 20%. I am renting a lovely home and paying much less to rent it than if I were to own it. Also, if the economy gets weird here I can easily pick up and head back to my home country and avoid any sort of hit from a recession. I see the headlines, I know what’s up. I will not be lured into something I can barely afford by FOMO and false promises of the Canadian Dream.

      • Mossy 5 years ago

        Yes @Jon Tario. We are in the same boat as are other families we know. Thing is, if you’ve lived in other world class cities, it’s impossible to rationalize the home values here.

      • Kevin 5 years ago

        I’m born and raised in BC. I applaud you. You see what is going on AND have a plan B. I’ve struggled with FOMO myself ( maby still). The vast majority of my friends thinks I’m crazy for renting and I make a good income. The numbers say renting is a better deal but emotion is a strong influence.

        • Joshua McIntyre 5 years ago

          @ Kevin, Read the book the Wealthy Renter. It a quick read and will show that you are on the correct track to faster wealth accumulation. However, to do so, you need to save and invest your money in the stock market – its far more fluid and you can diversify global and move money in day, not months. Home ownership is not investing or wealth accumulating.

    • ken 5 years ago

      So, I guess these immigrants will miraculously find 200K for a down payment then? Because with rates where they’re at and lending conditions tighter. nobody making even 100k can afford a house or most condos in the city.
      Greg, time for you to do your homework on how the financial system works, and what really drives housing markets. Hint: Credit, not people.
      If population drove prices, houses in India would be in the stratosphere, with over a billion people living there.

      • Canadian Citizen 5 years ago

        Thank you for this post… another person on here opened my eyes to a simple fact in real estate, it was simple and true like yours. He said.
        MANHATTAN is one of the most expensive properties in the world, 40 -1 hr min outside of it ,properties are $200-300k ,so that people can come into town and service the people of Manhattan and be able to afford their homes. Theres something wrong in Canada.

  • Abstractthe 5 years ago

    Some interesting stats that modulate the awe-factor of the first graph:

    – Canadian Population in 1971: 21M
    – GDP per capita (in USD) in 1971: 25,000
    – 1971 Dollars adjusted for inflation = $5.45 dollars today

    Gross numbers aren’t the story. Growth, decline, and the velocity/severity of same are what matter.

  • SUMSKILLZ 5 years ago

    If you look at other gateway cities you’ll see people find a way, often via sharing. Single family homes become multifamily homes (against code of course). Whether we’re talking high rises or ground based detached homes. Most won’t become buyers no matter how bad things get from a rental housing supply perspective. Prices are just too high compared to income.

  • Aleem 5 years ago

    The Outstanding Mortgage Credit chart is not very useful on its own since an absolute number has no context. For example, outstanding mortgage credit as a percentage of GDP would be more useful.

    • Trader Jim 5 years ago

      It’s only not useful if you don’t know what you’re looking for. The fact that there was no period of deleveraging or pause during the Great Recession likely means that we building in a much bigger correction. The two previous recessions resulted in horizontal growth, meaning they were healthy in executive. We didn’t compound leverage afterwards.

      Pro tip: You’re probably not the smartest person in the world, so just because you don’t see something, doesn’t mean other people don’t.

      On the topic of not useful, I don’t understand your company’s website. Why would you front run how your fees are lower, without comparing returns? Charging a fifth of the competitor doesn’t mean anything if you’re returning lower than them. Hedgefunds charge 3-4%, but outperform a lot of competitors over the long run.

      • Aleem 5 years ago

        Exactly what are you looking for with the Outstanding Mortgage Credit chart Trader Jim? You can’t analyze how much the correction will be unless you know the relative data.

        Pro tip: Stick to the facts Trader Jim and keep the insults to yourself. It’s nice to hide behind an anonymous handle.

        SHOW ME THE DATA: “Hedgefunds charge 3-4%, but outperform a lot of competitors over the long run.”

      • zz 5 years ago

        good job for being a dick…
        you are on every post.. trader jim.. what bank you working for? you are one of those home based trader lol

    • Bluetheimpala 5 years ago

      It would be useful in a different way. More? Maybe. Less? Sure. I guess I have to ask; blue go what he needed but do you and if not why? Seems crystal to me. Tick tock. BD4L.

  • ken 5 years ago

    Fear is materially entering the market now, as it dawns on sellers and builders that October is over and now we start the three slowest months of the year for home sales. Sellers who are running out of time will have to make some hard decision and are doing so now.
    More detached house listings in Vancouver for under a million are showing up, which means houses in Coquitlam, Burnaby, Richmond, Maple Ridge, and Surrey are no longer worth a million.

    • george 5 years ago

      Look at the listings for these houses on and I noticed most of them are at least 100k over 2017 assessment when not even the ones close to assessment are selling…

  • Bluetheimpala 5 years ago

    I once met a man who taught me about debt
    before i thought life was about people and respect

    Respect for ‘the market’ and the paper people’s hope.
    Respect that ‘a price is a price, this isn’t a joke’.

    The man laid it out and aghast was this Blue
    If you don’t realize this reality, you’re going to get screwed.

    Tick tock. BD4L.

    • thompson 5 years ago

      you got no talent in real estate or rhyming. horrible. give us all a break and tick tock yourself out of here.

    • AK46 5 years ago

      Justin Thyme missed this comment so ill fill in for him

      blah blah blah blah blah blah blah blah the world has changed and no one knows whats happening even me and im way smarter than you blah blah blah blah blah blah blah blah blah blah blah blah random pomposity blah blah blah blah blah blah blah blah blah

      blah blah blah blah blah blah blah immigrants blah blah blah blah blah immigrants blah blah blah blah blah blah blah more random pomposity blah blah blah blah blah blah blah blah blah

      blah blah blah blah blah blah blah blah westerners are bad blah blah blah blah blah look how SMART i am! blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah

      blah blah blah blah blah blah blah blah immaterial points blah blah blah blah blah china blah blah blah blah blah blah blah the world has changed and boy am i smart blah blah blah blah blah blah blah blah china


  • Oakville Rob 5 years ago

    It’s time to close the comments and review the rules when someone calling themselves AK46 chimes in. Where’s the moderator?

Comments are closed.