This Week’s Top Stories: Canadian Mortgage Growth Plummets As The Credit Cycle Breaks Down, and Toronto Real Estate Inches Lower

Time for your weekly cheat sheet on this week’s most important stories.

Canadian Real Estate

Canadian Mortgage Growth Plummets To The Lowest Levels Since 2001

Canadian mortgages growth is slowing, and fast. The balance of mortgage credit at large lenders reached $1.515 trillion, up $5.06 billion. That sounds huge, but it’s actually almost half of the dollar volume increase the market saw last year. The annual rate of increase has now fallen to 4.1%, the lowest it’s been since May 2001. Worth also mentioning in 2001, the Bank of Canada had to slash rates to save falling credit growth.

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Over 1 In 10 Canadians That Bought Real Estate In 2017, Borrowed Over $600,000

Canadian real estate buyers were on a borrowing spree last year, taking out huge loans. Mortgages over $600k represented 13.86% of mortgage originations in the Q4 2017. That’s a big jump, considering only 11.64% of originations were above $600k in the same quarter, just one year before. Remember, the larger the debt, the greater the chance of shock from interest rate hikes.

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It’s Not “Stress Testing” Canadian Real Estate Buyers, The Credit Cycle Is Breaking Down

Stress testing is being blamed for slowing credit growth, but it appears to be a more general trend. Outstanding mortgages stood at $1.515 trillion in June, up 4.1% from last year. Outstanding consumer credit reached $612.32 billion in June, also up 4.1% from last year. Both types of credit saw growth synch and taper lower, likely a result of higher interest rates. That or your local mega box chain is stress testing blender and vacuum payments now. \s

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CMHC: Canadians Over 55 Are Sitting On Over $277 Billion In Real Estate Debt

The CMHC debunked the myth that older homeowners are mortgage free. The majority of Canadians with a mortgage (57%), are above the age of 45. Those over 55 with a mortgage now represent $277 billion of total outstanding credit. Despite starting their homeowner journey earlier and at cheaper prices, older Canadians are still carrying a lot of debt into their twilight years.

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Toronto Real Estate

Toronto Real Estate Prices Slip Lower, But The Size Of Losses Shrink

Toronto real estate saw prices slip a little lower in July. The Toronto Real Estate Board reported a composite benchmark price of $768,400 in July. That represents a monthly decline of $3,700 from the month before, and an annual decline to 0.59% in July. The annual decline is a slight improvement from the 4.79% it was down the month before. Prices aren’t falling as much as last year, but it’s a bit of a reach at this point to say the market has “recovered.”

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  • Arbusto 6 years ago

    It is amazing how much more expensive Canada is than the USA ever was during their bubble.

    1/4 of Canada lives in a city where a house costs over $1000000. At no point was America this expensive for this many people. Not even close. And yet, the risk of a downturn is often dismissed as a local problem isolated to just a couple of cities.

    True, there is no “national market”, but Canada is a small nation made up of a handful of cities. If Vancouver goes down, BC is going with it. Same for GTA / ON. You can’t have real estate crash in half the province without affecting the other half. And those two provinces are home to half the nation.

    I fear that if it happens, the Canadian crash could be far worse that what was experienced in the United States.

  • BCMan 6 years ago

    Im in BC.

    Everyone has a story why the real estate in their city will survive.
    “Oh we were never on the map before as a place to retire and now we are!”
    “We have a university that brings in so many foreign students”
    “Our house prices are still some of the lowest in the province. You can even sell in Chilliwack and move here cheaper”.

    Yet I see more and more house signs going up and none are selling. Even at considered “low” prices for around 480k.

    The bubble is deflating and its going to be a horror show.

  • Tim Wealthmore 6 years ago

    Well, people only learn from mistakes… you don’t buy something for 10 when you make 2. Ultimately, its like pension if the back can’t buy the current it will not hold. Younge people cannot afford these prices. Time will tell in the meantime enjoy the Rate Hikes!!

  • H 6 years ago

    I have trouble not blaming all those who took on credit that they had no business taking. Houses should never cost what they do today in the GTA. They drove the prices up and it does no one any favours when hosing costs this high. No one.

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