Canadian Households Add $110 Billion To Mortgage Debt In 2020

2021-03-14 | 10:21:47

The pandemic didn’t slow Canadians from borrowing more to buy real estate. In fact, mortgage data may be showing the exact opposite. Statistics Canada (StatCan) data shows residential mortgage credit hit a record in 2020. Typically during a recession credit growth is expected to slow down. Last year saw the opposite, with declining rates pushing growth to a multi-year high. Canadian mortgage debt hit a new record high, at breakneck speed. Households had an outstanding balance of $1.65 trillion in Q4 2020, up 2.1% ($34.4 billion) from the previous quarter. Compared to a year before, this number is 7.1% ($110.0 billion) higher. These numbers only include the total of residential mortgage credit held by households. Business-owned residential real estate is excluded. Even factoring in the pandemic’s worst quarter, the annual rate of growth is a multi-year high. Mortgage credit’s 7.1% growth is the highest rate since 2011. Worth a mention is that mortgages were growing at a multi-decade low before the pandemic. The recession’s low-rate environment provided stimulus, which may seem unexpected. It’s likely a welcome and desired effect for policymakers. The record mortgage growth is very large, but there is a base effect occurring. Mortgage credit had unusually low growth in 2019, so it was likely to accelerate in 2020 anyway. But the incentives of lower interest rates gave it a further boost.

Source: Stat Can, Better Dwelling.