Last Updated on October 24, 2023 by Neil Sharma
Canadian mortgage debt and home equity lines of credit reached $1.98 trillion in May, comprising the lion’s share of total household borrowing, which rose by 0.8% month-over-month to $2.5 trillion, says Statistics Canada.
Mortgage debt grew by $16.3 billion in May, up by 1% from April and 8.3% from May 2020.
“Over the first five months of 2021, households added $57.5 billion in mortgage debt, compared with $34.3 billion over the same period in 2020,” said StatCan.
Dustan Woodhouse, president of Mortgage Architects, noted that mortgage debt growth is an auspicious sign for any country because it is indicative of both a growing population and healthy economy.
“Canadians are not actually taking on more mortgage debt themselves—median household debt is shrinking—but our country is because the population and housing stock are growing, therefore, the overall mortgage market is growing and it’s a good thing, it’s a good sign,” he said. “You wouldn’t want to buy a house in a country that has a shrinking population.”
According to the Canada Mortgage and Housing Corporation, the seasonally adjusted annual rate of housing starts was 282,070 last month, a decrease of 1.5% from 286,296 in May.
“Over a 10-year period, immigration to Canada has been about 4 million people, and where are they going to live? So it’s healthy mortgage debt growth,” said Woodhouse.
Canadians are deleveraging their credit debt in tandem with the increasingly buoyant economy. Last month, Matt Fabian, director of research and consulting at TransUnion Canada, told CREW that lenders will have to cognizant of potentially risky balances—if they’re not, the delinquency rate could rise—but he still noted that, excluding mortgage debt, consumers’ liquidity declined by 2.9% year-over-year in Q1-2021 to an average of $28,900 in large part because their savings rate surged by 28% of disposable income, which Fabian said was an all-time high. He also said the risk of defaulting had not grown.
“There’s been a shift in buyer preferences, and there are a whole lot of options for people who have decided to move because they work from home, and they’re making different choices and redirecting their cash and assets towards a different home. People are redirecting their spending because they aren’t travelling, so they’re upgrading and improving their homes,” he said.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
