Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canadian Mortgage Debt Explodes In Growth, As Payment Deferrals Hit Over 743,000
Canadian mortgage debt is seeing growth accelerate, as hundreds of thousands stop making payments. The balance of mortgage debt reached $1.68 trillion in May, up 6.0% from a year before. This is the highest rate of growth since July 2017. The total number of Canadians on mortgage payment deferrals has also reached 743,000, so it’s easy to see this number swell.
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Canadian Homeowners Pull Back On Home Equity Borrowing, Pay Down Debts
Canadian homeowners are deleveraging on home equity loans. The balance of home equity loans reached $307.75 billion in April, down 0.51% from a month before. Personal loans, which represent the majority in the segment, grew just 0.79% from last year. Despite robust growth in mortgages, home equity loans are shrinking during a period when they typically grow.
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Canadian Seniors Raiding Their Home Equity With Reverse Mortgages Picks Up Again
Home equity borrowing is cooling, but reverse mortgage debt is seeing robust growth. Reverse mortgage debt hit $4.21 billion in April, up a whopping 15.09% from last year. Year-over-year growth hit a low of 13% in December, before reversing course.
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Canadian Households Are Hoarding Cash, Here’s What That Means
Canadians have been stashing away extra cash, even before the pandemic. The household savings rate reached 6.1% in Q1 2020, up 165% from the same quarter a year before. The rate has been rising consistently since Q3 2018, when it bottomed at just 1.3%. This is the highest savings rate since the oil crash of 2015.
Generally when savings rise, that money is diverted from spending. A sudden shift to saving is both a negative sentiment indicator, as well as a negative outlook for spending. Since each dollar saved is a dollar not spent, this can have a big impact on the economy when it suddenly changes.
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