New mortgage growth moderates from the blistering highs seen during the first half of 2021
Canada’s total consumer debt load reached a new record high of $2.2 trillion during Q3 despite new mortgage growth slowing down this quarter, according to Equifax.
This represented a 7.8% annual increase in consumer debt, pushing the average per capita debt load to $20,739, Equifax said.
“The good news is that we saw higher payments and a large fall in non-mortgage consumer debt during 2020 due to government support mechanisms, increased saving levels and reduced credit demand,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada. “Average non-mortgage debt is still below pre-pandemic levels but it has been gradually increasing throughout 2021.”
Read more: Mortgage debt growth accelerates, but borrowing activity stalls – BoC
New mortgage growth this quarter moderated to a 7.7% year-over-year increase, markedly lower than the 20%-plus levels seen during the two prior quarters. However, the average per capita loan amount for new mortgages spiked by 1.4% quarterly and 18.3% annually to reach roughly $360,000.
“Future interest rate movements will not only have an impact on consumers with variable interest rate products in the short term, but also could put pressure on some homebuyers with fixed interest mortgages in future years,” Oakes said. “Consumers who took advantage of very low rates over the last 18 months on high-value mortgages may feel pressure at the end of their term when they have to renew their mortgage at a much higher rate.”
