Canadian Mortgage Growth Improves, But It Was Still A Very Weak September

Canadian mortgage credit is growing, but isn’t quite where it should be. Bank of Canada (BoC) numbers show the balance of mortgage debt hit a new high in September. Mortgage credit growth has improved substantially from last year. However, the improvements to growth, still don’t bring it into typical range.

Canadians Owe Over $1.6 Trillion In Mortgage Debt

The balance of outstanding mortgage credit at institutional lenders is chugging higher. The balance hit $1.6 trillion in September, up 0.5% from a month before. This represents an increase of 4.2% from the same month last year. The new balance is a new record high for the segment, and improvement from last year’s rate of growth.

Canadian Outstanding Mortgage Credit

The outstanding balance of Canadian mortgage credit.

Source: Bank of Canada, Better Dwelling.

The 12-month rate of growth is improving, but it’s pretty far from the healthy level Canadians are used to. The 4.2% increase in September is up 16.7%, compared to the same month last year. However, last year was the smallest 12-month growth for September in at least 3 decades. Last month, was the second lowest 12-month growth for September, since 2001. Things are getting better, but they’re far from back to normal. To put that in context, we’re at tech bubble bursting, 9/11 levels of mortgage growth.

Canadian Mortgage Growth Likely To Improve Near-Term

Annualizing the past 3-months, we can see some near-term growth for mortgage debt. By annualizing 3-month growth, we’re projecting what the whole year would look like, if it were like the past 3-months. It’s a common way of seeing how short-term growth looks, in contrast to the same period last year. The 3-month annualized pace of growth reached 4.9% in September, about 16.7% higher than the current pace. This means the 12-month rate of growth is likely to increase in the short-term.

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 growth is improving, but that doesn’t mean a whole lot. The increased rate of growth looks impressive, but it’s compared to a multi-decade low. Last year’s growth was artificially suppressed, by new mortgage regulations. At this point, anyone telling you it’s a recovery is taking a generous view of the numbers. The only thing that’s clear is the numbers are better than last year.

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  • Omar 8 months ago

    Canadians have very short memories. A brief increase in prices is enough for every real estate agent in the country to say things are back to normal. They don’t seem to realize if none of the structural components have changed, the vulnerability still exists.

  • Trader Jim 8 months ago

    “we’re at tech bubble bursting, 9/11 levels of mortgage growth.”

    Something to think about. That was a fairly substantial recession for our number one trade partner. Mortgage credit is growing at that level, while they’re having the best economy they’ve ever had.

    • Jin 8 months ago

      One difference is the US economy is based on buybacks right now. That isn’t the same as productive economic expansion. Here’s a good primer on why buybacks used to be illegal.

      • Ethan Wu 8 months ago

        Buyback economies are great to trade, but excess capital for a buyback is a sign that a company is making more money than they know what to do with. That usually means no expansion opportunities.

        Important risk level to watch. Buybacks are excess non-productive capital, being soaked up.

        • MH 8 months ago

          Unless it’s borrowed money. Check the corporate leverage and the quality of debt. If even BOJ tells Japanese banks to get out of CLOs you know things are really getting hairy. And if you want an extra kick check the corporate leverage numbers in Canada.

          Here is an extra fun fact – buybacks are drying up quickly as the repo market keeps falling apart despite the heroic efforts by JP. Probably just a coincidence.

        • KS 8 months ago

          Non bank lenders have to find the mortgage somewhere….so where is that money coming from? Do the big banks trading desk still fund alot of these deals?

          Additionally I think it’s slightly misleading that you state in a blanket statement about non bank lenders and the arrears. Can you compare credit quality? LTV? Areas where the mortgages are located? I can guarantee you that a house in arrears in the GTA will probably sell alot faster than Calgary at the moment.

          I don’t disagree that arrears are rising but please don’t give a half story.

  • Ali 8 months ago


    Thank your for this charts. I looked on Cansim and the Bank of Canada data, but I can not find the same Canadian Outstanding Mortgage Credit data as you. Could you please indicate which table or vector Cansim you use? Thank you in advance,

    • Ethan Wu 8 months ago

      The bank of Canada emails their numbers to media. You can email them for a spreadsheet.

      • Ali 8 months ago

        Thank you for your answer !
        The table is : 10-10-0129-01 (formerly CANSIM 176-0069)
        The numbers are related to Unadjusted Total outstanding balances ( Average at month-end). Data for August and September is available. All the best.

  • Robert 8 months ago

    One day there is an article here complaining about crazy amount of debt in Canada. Another day there is an article that debt is not growing fast enough… What’s your point in the end?

    • Ethan Wu 8 months ago

      Credit levels and velocity are two different concepts. The level of credit people have is a problem. The speed at which credit grows is a different problem. One impacts the other.

      The level of debt is how much risk a households have as an aggregate. The velocity is how quickly the economy is expanding. Slowing velocity means higher risk for people with high levels of debt.

      They say the data is for millennials, but if you don’t read the informational posts, only professionals understand what it means.

      You’re also expecting them to make an explicit statement on whether or not you should do something. That’s not what they’re doing, or even the intention from I gather.

      • Pooh Bear 8 months ago

        Probably a Realtor. You need a triple digit IQ to understand abstracted concepts like debt analysis.

        One of the problems with everyone in this economy, is they have an opinion, but don’t understand economies are more complex than the job they used to get a mortgage.

        People often mistake leverage for intelligence.

  • LoL 8 months ago

    Agree Robert
    I think they are just scrambling to post now,no real mission statement.
    Excessive mortgage dept is not good for our long term economy, but sure makes are short term GDP look good.

    • Kathleen 8 months ago

      Found the guy with the smallest dick in Toronto apparently.

      First you complain you’re seeing too much bias, because they’re reporting things are bad. When things are doing anything, and they report that, you complain they don’t have a mission.

      That’s how a lack of bias works. People lacking the ability to understand objectivity, don’t understand it. It’s just such a foreign concept to you that someone wouldn’t try to advance an agenda.

  • LoL 8 months ago

    Think you ment smallest breasts.

  • just my opinion 8 months ago

    Wow Nancy with comments like that not sure I’ll be coming back here too often.

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