One big bank suggests mortgage growth will decline in the near future
One big bank suggests mortgage growth will decline in the near future.
Mortgage growth grew at the beginning of the year following a slow end of 2016, according to RBC.
"The introduction of mortgage qualifying standards by the federal government in October 2016 ostensibly had a minimal dampening effect on mortgage loan growth. Instead robust home sales in early 2017 appeared to drive a strong uptick in mortgage demand earlier this year,” the bank said in a recent report, entitled Household credit growth accelerated through the July hike. “The drop in national home sales that occurred in the second quarter has not yet had a material slowing impact on mortgage demand—given a typical lag between the sale of a home and a mortgage loan.
“But higher borrowing rates against a backdrop of regulatory changes—notably Ontario’s Fair Housing Plan introduced in April— are expected to dampen housing demand and consequently, slow mortgage growth over the coming quarters.”
Overall, credit debt in Canada – including mortgages – jumped to $1.769 trillion from $1.666 trillion a year ago, according to Equifax’s Q2 National Consumer Credit Trends Report.
That boom was driven by Ontarians, according to the credit agency.
"Desire to take on more debt is certainly highest in Ontario," Regina Malina, senior director of data & analytics at Equifax Canada, said. "Even in the face of potential increase of interest rates, consumers across the country continue to borrow and spend to some degree. Their overall ability to pay back this money on time remains stable though. As interest rates gradually rise, and borrowing costs increase, this trend may be impacted over time."
Mortgage growth grew at the beginning of the year following a slow end of 2016, according to RBC.
"The introduction of mortgage qualifying standards by the federal government in October 2016 ostensibly had a minimal dampening effect on mortgage loan growth. Instead robust home sales in early 2017 appeared to drive a strong uptick in mortgage demand earlier this year,” the bank said in a recent report, entitled Household credit growth accelerated through the July hike. “The drop in national home sales that occurred in the second quarter has not yet had a material slowing impact on mortgage demand—given a typical lag between the sale of a home and a mortgage loan.
“But higher borrowing rates against a backdrop of regulatory changes—notably Ontario’s Fair Housing Plan introduced in April— are expected to dampen housing demand and consequently, slow mortgage growth over the coming quarters.”
Overall, credit debt in Canada – including mortgages – jumped to $1.769 trillion from $1.666 trillion a year ago, according to Equifax’s Q2 National Consumer Credit Trends Report.
That boom was driven by Ontarians, according to the credit agency.
"Desire to take on more debt is certainly highest in Ontario," Regina Malina, senior director of data & analytics at Equifax Canada, said. "Even in the face of potential increase of interest rates, consumers across the country continue to borrow and spend to some degree. Their overall ability to pay back this money on time remains stable though. As interest rates gradually rise, and borrowing costs increase, this trend may be impacted over time."
