The numbers suggest that Canadian consumers have largely adapted to the new normal of B-20
The share of mortgages going to highly indebted Canadians has reached the highest level since the start of 2018, according to data from the Office of the Superintendent of Financial Institutions.
In the fourth quarter of 2019, as much as 17.5% of mortgages during the period were loaned to Canadians who are borrowing more than 450% of their incomes.
“The increase has been rising over the past two years, and now represents the largest segment in the market since prior to B-20 Guidelines and the stress test,” real estate information portal Better Dwelling explained.
The proportion was 16.4% during the quarter prior, and 14.1% during Q4 2018.
A major factor in this trend is the fact that a significant number of Canadian consumers have already adapted to the new normal of the tighter regulations, the Better Dwelling analysis added.
“OSFI regulated lenders are becoming more comfortable with lending higher ratios already.”
The prolonged period of low borrowing costs has proved more of a bane than a boon in that regard, according to FP Canada consumer advocate Kelley Keehn.
“Low interest rates have been great for the economy and politicians, but terrible for consumers’ financial well-being,” Keehn told BNN Bloomberg in an interview late last year.
“What we’ve learned along the way is that haphazard spending, while lacking a plan to pay it off, can affect your health, work and state of mind… The result is Canadians losing sleep about their money woes, millennials lying about their finances and more employees using work time to deal with financial strains.”
