Time for your weekly cheat sheet on this week’s most important stories.
Canadian Real Estate
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.
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.
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
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.
Toronto Real Estate
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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