Canadian Mortgages Just Had One of The Slowest Quarters Ever 

Calgary Condos Prices Dropped 6% In 2016.

Canada’s debt-crazed households finally met their match—interest rates higher than inflation. Bank of Canada (BoC) data shows residential mortgage credit slowed even further in Q4 2023. The unusually slow quarter revealed households accumulated mortgage debt at one of the slowest rates ever, as interest rates divert capital to areas outside of housing. 

Canadian Mortgage Debt Had One of The Slowest Quarters On Record

Canadians are accumulating mortgage debt at an unusually slow rate these days. The balance rose just 0.47% (+$8.46 billion) to $1.8 trillion in Q4 2023, about half the rate in the prior quarter. The rate was also the lowest growth of any quarter since 2019, and the slowest Q4 reported since 2008—back when it was in a full blown contraction. 

Canadian Mortgage Borrowing Is The Slowest It’s Been In Years

The slow pace of mortgage borrowing has been a broad trend over the past year. Annual growth of 4.18% (+$72.47 billion) in Q4 marks the smallest number since Q1 2019. As for annual growth reported in the fourth quarter, one has to go back to 2009 to see a slower year-end number. 

Canadian Residential Mortgage Growth (Annual)

The 12-month change in outstanding mortgage credit at institutional lenders, per quarter.  

Source: Bank of Canada; Better Dwelling. 

Higher Rates Hit The Pause Button On Canada’s Low Rate Bubble

A combination of factors are driving this, including prior rate cuts and the current elevated levels. When rates were cut in 2020, the desired impact is to pull purchases forward to boost competition and prices. A slowdown after normalization of rates is always expected, since the excess demand was borrowing future demand. 

It’s also a predictable (and desired) impact from elevated interest rates. Rising rates not only shrink the amount of mortgage debt that can be borrowed, but also incentivize people to pay down existing debt. There’s also the additional impact of directing capital from non-productive investment to productivity-based categories, since elevated rates slow asset-based inflation.  

The last point might be a critical issue. Canada’s real estate-dependent economy has played a significant role in creating what the central bank calls a “productivity crisis.” With easy, relatively low-risk profits driven in housing, there’s been little reason for investors to invest in higher-risk, innovation and manufacturing growth. An issue that’s having knock-on effects, such as motivating one of the biggest capital flights in the country’s history

On that note, experts believe Canada will cut rates ahead of the United States. They’re currently forecasting this will occur mid-year.



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  • Shlaki 1 month ago

    Lower rates to 0% to pump housing

  • americanhomebuy 1 month ago

    Quite simply – investors have left Canada to go to the USA for cheap new homes.
    Game over for Canada for the next 20 years.

  • Frank 1 month ago

    Yes , there was a near $50 billion foreign investment pulled out of Canada last month. 100 ceos signed an open letter to Finance Minister asking pension funds to invest in Canada. Most those companies are publicly traded. CPP, OTPP and OMERS said no, they are obligated to their clients for best returns possible. Putting up $300 billion in mortgage bonds, the Feds had no takers and bought them themselves. Canada is in trouble. Deep trouble.

    • Doomcouver 1 month ago

      Yeah I’m expecting our government may have to start worrying about deflation as asset prices north of the border begin to implode when household finances turn critically toxic. Add in some likely negative net migration and mass capital flight, and we’re facing the ugliest economic picture the country has ever seen. Though this will be wholly unsurprising to anyone who has been following Canada’s economy for the past few decades.

    • Patiently Waiting 1 month ago

      Thank you Frank for this information. I wasn’t aware this had happened.
      My question is how long can this government continue to buy back mortgages to cover up what’s really happening. It seems they have an endless money supply.

Comments are closed.