Canada

New Mortgage Lending In Canada Sees Dollar Growth Boom

Canadian mortgage lenders are seeing business pick up – and fast. Bank of Canada (BoC) data shows funds advanced for new mortgages made a big double digit leap in August. The rise in funds is still weighed down by a weak first half of the year, but lending is improving.

New Mortgage Lending Was Up Over 23% In August

Canadian mortgage lenders lent a lot for new mortgages. Lenders advanced $42.98 billion in funds in August, up 23.52% from last year. Insured mortgages represent $11.09 billion of the total, and is up 12% compared to last year. Uninsured mortgages represent the other $31.89 billion, which is up 28% compared to last year. Both segments made big increases, but uninsured mortgages are growing twice as fast.

Canadian New Mortgage Lending

The monthly dollar volume for residential mortgage funds advanced by institutional lenders.

Source: Bank of Canada, Better Dwelling.

The 12-month pace of growth is down from the month before, but still made a big increase. The 23.52% growth in August is the largest increase for the month, over at least 5 years. The beginning of the year started off weak, so this year’s numbers still aren’t that impressive. This becomes much more clear, when looking at the moving average.

Canadian New Mortgage Lending Annualized Change

The 12-month change in monthly dollar volume for residential mortgage funds advanced by institutional lenders.

Source: Bank of Canada, Better Dwelling.

A Weak First Half To The Year Makes Growth Less Impressive

The simple moving average (SMA) for new mortgage lending is higher, but not by an impressive amount. The 12-month SMA is $31.30 in August, up 2.24% compared to the same period a year before. A weak first-half to the year likely contributed to a later demand squeeze. Not to discount the growth, which is still there. It just doesn’t look like a boom, like the straight year-over-year read does.

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.

The increase is still an increase, and is the highest it has been in over a year. The 2.24% increase for the 12-month SMA in August is the first increase for 2019. It’s also the biggest number printed since June 2018. Which sounds impressive, until you see how this historically looks.

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.

Canadians are back to borrowing for new mortgages, but it’s still too early to call it a new trend. The first two months printed very large, unadjusted increases year-over-year. The 12-month SMA is also now higher than the same period a year ago. However, this is only two months unadjusted, and one month as a 12-month SMA to show growth.

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2 Comments

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  • Katia 2 weeks ago

    The “the Liberals are going to send prices higher” crowd. Wonder if they know people are currently trying to deter them from executing on the program?

  • Li Gongfu 2 weeks ago

    Any idea how much of this refinancing? Since that’s usually counted as an origination too.

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