Canadian real estate markets have come to a halt, and so has mortgage borrowing. Bank of Canada (BoC) data reveals residential mortgage credit growth slowed further in September. Higher rates have almost killed activity, with debt accumulating at the slowest rate in 20 years. Is it too slow or the expected response following unprecedented real estate activity?
Canadian Mortgages Haven’t Seen A Slower September Since 1999
Canadian residential mortgage growth continues to slow. The outstanding balance grew 0.2% (+$4.2 billion) to hit a total of $2.1 trillion in September. This marks the slowest monthly growth since April 2023, when buyer’s were halted in their tracks by a surprise rate hike. Canadians haven’t seen a slower September for mortgage credit accumulation since September 1999.
Canadian Mortgage Debt Hits A New Record High
The outstanding balance of Canadian residential mortgage credit.
Source: Bank of Canada; Better Dwelling.
Annual Growth For Mortgage Credit Hasn’t Been This Bad Since 1996
Growth over the past year has been unusually slow too. Annual growth fell to just 3.2% (+$65.9 billion) in September, marking it the 16th month of deceleration. Canadians haven’t seen annual growth this low since March 2001. The last September to mark such slow growth was more than a generation ago, all the way back in 1996.
Canadian Mortgage Debt Growth
The annual growth rate of Canadian residential mortgage credit.
Source: Statistics Canada; Better Dwelling.
Canadian Mortgage Debt Is Rising Slowly, But Is It Really That Slow?
Time to panic? Probably not, since this is an expected trend in response to the past few months. Central banks use low rates pulling forward purchases, not necessarily stimulating new demand. When rates normalize, the purchases that should be occurring in the current window have already been made. Averaging the past 36 months of activity may provide a little clarity.
Canadian Mortgage Slowdown Still Not Enough To Balance Boom
The 36 month average growth of Canadian residential mortgage credit.
Source: Statistics Canada; Better Dwelling.
Averaging activity over the past 36 months still shows deceleration, but gives more context. Growth over the past year may be slow, but it’s nowhere near wiping out the unusually strong stimulus that occurred during the pandemic. The rate is still significantly elevated above pre-pandemic borrowing, and Canada wasn’t exactly considered a slow and boring real estate market back then.
