Canadian mortgage debt balance sees fastest growth since 2018

The September increase puts an end to three straight months of deceleration, according to data from the Bank of Canada

Canadian mortgage debt balance sees fastest growth since 2018

Canadian overall mortgage debt reached $1.71 trillion in September, representing a 5.67% annual increase that was the fastest pace since 2018, according to the central bank.

The Bank of Canada figures also showed that the national outstanding balance saw a 0.9% monthly uptick in September.

“The 5.67% annual rate puts an end to three consecutive months of deceleration,” real estate information portal Better Dwelling said in its review of the BoC data. “It’s not just a new record, but a huge acceleration for growth.”

The September figures come in the wake of Q2 numbers from Statistics Canada that showed the ratio of national mortgage debt to GDP reaching 84.28%. To compare, the level was 69.13% of GDP during the same time last year, and 59.02% a decade prior.

“That means during that period, mortgage debt grew over 40% faster than GDP,” Better Dwelling said in a separate analysis. “Considering this ratio was just 39.62% in 2000, that’s a huge increase. Especially if the economy doesn’t just bounce back to pre-pandemic levels of activity soon.”

Meanwhile, the national household debt service ratio dropped from 14.54% to 12.4% during the first half of 2020. Household debt as a share of income also fell “from 175.4% to 158.2%, as household disposable income increased 10.8% and the stock of credit market debt remained relatively unchanged,” StatsCan said.

Together, these trends pushed average Canadian debt per capita up by 2.2% annually during the second quarter, reaching $73,532. Overall consumer debt went up by 2.8% during the same time frame to settle at $1.99 trillion, Equifax Canada said.

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