Canadian mortgage growth continues to underwhelm. Bank of Canada (BoC) numbers show outstanding residential mortgage credit hit a new record high in January. The record was dwarfed by the slowest annual pace of growth for a January in over three decades.
Canadians Owe Over $1.5 Trillion In Residential Mortgage Credit
The outstanding balance of mortgage credit at institutional lenders reached a new record high. The balance reached $1.547 trillion in January, up just 0.06% ($1 billion) from the month before. This represents an increase of 3.2% compared to the same month last year. The monthly pace is as small as it sounds, but the annual pace is better than the month before.
Canadian Outstanding Mortgage Credit
The outstanding balance of Canadian mortgage credit.
Source: Bank of Canada, Better Dwelling.
The monthly change and the annual change both made interesting moves. The monthly growth rate of 0.06% is the second slowest for January since 2001, last year claiming the slowest. The annual pace of growth is 38.46% lower than last year, which also made it the slowest January since 1983. On the bright side, the annual pace of growth was higher than the month before. It’s way too early to tell if the trend is reversing or making a DCB, but the direction isn’t 100% clear.
Mortgage Growth May Return Soon… Maybe
Annualizing the past three months of data, we could see the 12 month trend rise. In order for the 12 month trend to rise, a series of 3 month annualized data will print larger numbers. In plain English, the 3 months of annualized growth will be larger than the 12 month, before we see growth.
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.
The 3 month annualized pace of growth is currently higher. The pace reached 3.9% in January, 21.87% higher than the 12 month pace of growth. This is the second month the 3 month was larger than the 12, but don’t get too excited. Last year there was a similar trend, that just fizzled out the next month.
There were some positive notes for growth, but most indicators weren’t great. Both the short-term and 12 month annualized pace of growth improved from December. It could be a sign that we’ve reached a bottom, and things are starting to reverse. That’s likely wishful thinking however, since it was the slowest January in three decades.
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Economy in the crapper, I’m sure it’s just a temporary down. /s
Most people aren’t smart enough to realize that a rise in housing prices above the rate of income growth means less consumer goods and investments are made in the general economy. That physically has to catch up with consumption of goods and services, especially once people stop using debt to make up the difference between rising costs and loans.
Yes, remember that these numbers (GDP, credit growth, etc) are based on some of the highest levels of immigration the country has ever seen. Expanded targets, incentives for foreign companies, etc..
Imagine what these numbers are going to look like when economic immigrants get here, and realize they were sold on a booming economy that revolved solely on building and selling homes to each other.
From some time in 2014 until mid 2018, the biggest line at my 905 region bank was for inquiries about foreign fund transfers. These days that queue is gone. I was in Montreal recently, happened to visit a bank in the burbs, and I saw the foreign fund transfer inquiry line up there. Ahhh, that’s where the line went.
I guess its all good, Toronto and Vancouver can’t get all the shine.
I am one of those immigrants. I just obtained my Canadian citizenship but recently received an offer to move south of the border where the cash deposit I have been sitting on to buy Canadian property will be 75% down on a similar property. Salary is even a bit better as well. Can’t believe I will be emigrating twice in 7 years. Canada is certainly not what I though it was. But, I blame nobody; it is my responsibility to educate myself. I do love the natural environment here and I will be back when it makes sense.
Peace to all.
dead cat bounce. Looks like a recovery, but anything that drops too quickly will have a “recovery” before falling even further. My money’s on a DCB too, especially if we get a recession.
Recession is more than 5 rate cuts by BOC. Which would put owning into better position than renting regarding monthly expenses. Good luck with that.
An average owner of 1M home would have his expenses decreased to $1000/mo after 5 cuts.
The country’s largest real estate builder is diversifying outside of real estate after 40 years. I’m sure your condo purchase is going to be fine though. 😂
Builders don’t know how to make money in real estate. It’s not like they’re negative cap condo investors. That’s the *real* smart money driving the market.
He is just jealous he sold too early.
It’s even worse than I thought. The dude has lost his mind and talking gibberish:
“I basically had all my eggs in one basket for 40 years and it’s time to take a few of those eggs and put them into a more diversified portfolio of assets,” Gilgan, 68, said in an interview at Bloomberg’s Toronto office.
He needs to talk to a RE agent ASAP.
Whats the point? RE agent is going to tell RE will ONLY go UP even if economy crashes.
🤣 “Down Under” reference.
Whats’ a “down under” reference?
Check the newsletter, there’s a market joke almost everyday. Today was a Men At Work January 1983 reference.
This is what I am watching now.
You should also watch this
This will tell you how much inflation you can expect going foward
Good work, guys.
Is the BoC source data on their website? If so, please can you hyperlink in the article or reply with the link?
Hey Gys can someone explain the near vertical chart for outstanding credit. I keep reading that grow has decelerated but the chart still looks vertical.
What’s going on?
“Slowing growth” is different from a reduction.
If the total value of whatever is $100 and there was an additional $10 of it last year (now a total of $110) and an additional $5 this year (total of $115), that is growth, but it’s slowing growth. It’s still increasing, but not as quickly as it was.
Hi M.Bury, thank you for your response. I understand the concept of growth and slowing growth.
My question is why does the graph appear unabated in growth when slowing growth continues to be reported. The image doesn’t match the words.
Scale. The horizontal axis measurement is so small it won’t show a couple month change.
Hi John, I believe you are using a cellphone. If you open the page using desktop you should be able to see the slowing growth.
Note to BD, it would be really nice if we could freely zoom in and out of the charts 🙂
What it means John is that BD is only going to report the negative news and nothing more.
They have the same bias as the real estate agents they despise lol.
I like my news unbiased and I like the whole story.
I sold out of my old neighbourhood and moved to a new place.
My old neighbourhood dropped 100k but my new neighbourhood went up 50k to 75k within less than a year.
So i feel like I’m up 150 to 175k from where I would have been if I stayed there.
Just putting it out there for the people who think the money has completely dried up in real estate.
Also my new house cost 270k one year ago here in Ontario.
I don’t appreciate your attempt to exploit my question to take a jab at BD or others.
I hope your comment gets removed along with this one from me.
Well John I’m sorry to hear that. So why does the chart not match?
I suspect it is because the X-Axis is too large so the data for even a 3 year period isnt truly visible. But the unwillingness of commenters to either critically respond or comment on it makes you wonder if they are just as blinded by their belief as those on the other side of the post.
wait so your ‘new house’ was worth 270K last year and appreciated by 75k in a year? 25% increase? please do tell what area this is? Also did you significantly downsize. I am assuming the 100k drop was on a house that was probably worth 700k
Rustinpeace I bought in a small town between Barrie and parry sound area
And yes my house is worth 325 to 350k based on the other 1800sq ft bungalows going for 300k to 315k around me.
My home is 2700 sq ft finished area with all basic amenities of the city- water, nat gas etc.
And yes my previous home was 700k.
At the time when I bought my house, bungalows were selling for 180k (updating required) to 230k (minor updating required) I bought based on the cheapest price for the most house closest to the city.
The neighbourhood isnt as nice as my old neighbourhood but the house has an additional 500 sq ft and more potential than my last home.
The home needs extensive updating unless you like the early 90s look lol. Lots of brown and dark wood.
I figure 80k should do it and my home should be worth 450k to 475k when it’s done (fingers crossed)
And in my opinion it looks like others are jumping on the bandwagon. Lots of home construction/ reno’s going on up here.
Toronto based developer Milbourne investments just bought 8km of waterfront and I’m waiting for them to hopefully start to get some fresh new homes in the area.
That’s because the chart is arithmetic instead of logarithmic. On a log chart you can see the slowdown clearly because it shows % growth instead of absolute growth.
I made a log chart of the same data because I wanted to see the data properly. It’s just a basic excel chart but it does the job.
Statscan has data you can import from Jan 1969 to the Present into Excel. Then click on the chart button, select line chart. Right click on Y axis and change the scale to logarithmic. Change the lowest value and highest value to something reasonable so the data isn’t all scrunched into the middle of the chart, and then you’ve got it.
Hope that helps!
When you fuel a housing bubble, you eat tomorrow’s lunch….
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