Canadian home buyers weren’t shy about borrowing towards the end of last year. Bank of Canada (BoC) data shows a big increase in mortgage credit issued in November. The traditionally slow month, was actually one of the biggest in years.
Canadians Borrowed Over $37 Billion In New Mortgage Debt In The Month
New mortgage lending reached a record amount for the month of November. Borrowers took out $37.94 billion in mortgage debt in November, down 6.10% from a month before. Compared to last year, the amount is now 20.79% higher than a year before. The dollar amount is the largest going back to at least 2013. It’s also twice the amount borrowed just five years ago.
Canadian New Mortgage Lending
The monthly dollar volume for residential mortgage funds advanced by institutional lenders.
Source: Bank of Canada, Better Dwelling.
The growth is lower than the month before, but still one of the largest for the month. The 20.79% 12-month increase in November, is the largest for the month since 2014. Some of this has to do with buyers delayed in the first half of the year. When looking at it longer term, it’s a little more balanced. But only a little.
Canadian New Mortgage Lending Annual Change
The 12-month change in monthly dollar volume for residential mortgage funds advanced by institutional lenders.
Source: Bank of Canada, Better Dwelling.
Strong Mortgage Growth, Even When Averaged With A Weak Start
The average lending that occurred is very strong, but not as outrageous as comparing just November. The 12-month monthly average works out to $33.56 billion in November, up 1.65% from the month before. Compared to last year, this works out 9.32% higher. Big growth, but it highlights the delayed demand skew.
Canadian New Mortgage Lending – Moving Average
The 12-month simple moving average for monthly dollar volume on residential mortgage funds advanced by institutional lenders.
Source: Bank of Canada, Better Dwelling.
There is acceleration of growth, even by looking at a monthly moving average. Using a monthly moving average, this would still be the strongest 12-month increase since 2016. Growth is unmistakably accelerating.
Canadian New Mortgage Lending – Moving Average Change
The 12-month simple moving average for monthly dollar volume on residential mortgage funds advanced by institutional lenders.
Source: Bank of Canada, Better Dwelling.
Canadian mortgage lending is once again growing very quickly, any way the numbers are cut. Prices and sales have both been rising on a national level, which explains the rise. Both of those are being driven by a combination of delayed demand, lower rates, demand inducement schemes, and FOMO from tight supply.
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Analysts are pricing in a 50bps cut this year from the BOC, which will blow the profit margins of the banks. Expect more layoffs.
Big downgrades from usually bullish firms.
https://www.bnnbloomberg.ca/canaccord-downgrades-canadian-banks-amid-toxic-mix-of-downside-risks-1.1384642
Margin compression concerns were on BNN this week actually.
https://www.bnnbloomberg.ca/investing/video/canadian-banks-face-elevated-credit-risk-in-2020-analyst~1907841
After highest insolvency , the biggest mortgage gain in a month, how irresponsible is this .
To all the FOMO people who purchased a home within the last few months, the housing bubble thanks you. It has never felt bigger or more satisfied.
Unfortunately, there’s very little it can keep ingesting. Acid reflux is beginning to kick in. It’s doing it’s best to keep the food down, but is having trouble. It will still be taking on more food, but unfortunately, that will only be able to stay in the mouth. No room left to go down.
It’s also no longer worth offering pepto bismol or tums or any other ant-acid to the bubble. You see, for the Pepto or Tums to be effective, the bubble would need to have room left in its throat to swallow the stuff. Unfortunately, at this point, there’s just no room left to allow that.
The only solution left is to allow the bubble to throw up on its own, or burst. Once either occurs to the bubble, it can start feeding again from the beginning.
Once again, the bubble thanks all the FOMOs who helped make this possible over the last few months. It has never felt worse and it thanks you for your contributions as it’s put out if its misery.
Lots of people make fake document , the banks closed their eyes because the mortgage secured by bank of Canada through cmhc and if the mortgage failed they do not loose any money and if not they make money no risk for the bank and bank of Canada from the pocket of average people pays the damage , https://betterdwelling.com/city/toronto/toronto-households-are-going-broke-fast-insolvencies-rise-18/?utm_source=Better+Dwelling+Website+Signup&utm_campaign=34be195331-fras_jan_112018-3094981_COPY_01&utm_medium=email&utm_term=0_bde8feedee-34be195331-309124101
Now we have the highest increase in mortgage , How irresponsible is that
This is not accurate, if we are looking at all mortgage the total will keep going up every month because, math.
What you want to look at are new mortgages for that month. There is no large increase of new mortgages for the big banks during this time. Not sure if this is largely third party lenders.