Canadians went on a real estate shopping spree during the pandemic, and it’s been great for banks. Canadian Bankers Association (CBA) data shows mortgage accounts reached a record in April. Mortgages aren’t just getting larger, a lot more people are taking them out. The annual rate of growth for the number of accounts is now at the highest level in over half a decade.
Mortgages Held By Canadian Banks Rises To A New Record High
Canadians have been taking out new mortgages at one of the fastest rates ever. CBA members, which hold most of Canada’s mortgages, reported holding 4,948,248 mortgages in April. This is up 0.5% (23,649) from the month before, and 2.5% (121,500) higher than last year. It’s not the fastest growth the market has seen, but it’s the fastest rate seen in a long time.
Canadian Mortgages Held By Banks
The total number of mortgages held by Canadian banks, which represent the majority of mortgages in the country.
Source: CBA; Better Dwelling.
Mortgage Accounts Grew At The Fastest Rate Since 2014
The annual rate in the number of mortgages outstanding is growing at the fastest rate in over half a decade. The 2.5% annual rate reported in April was last beat in 2014, during the oil-driven real estate boom. It shouldn’t be too big of a surprise considering home sales have never been higher. Keep in mind this number is offset by older homeowners paying off their mortgages. Do people still do that?
Canadian Mortgages Held By Banks Change
The 12-month change in the total number of mortgages held by Canadian banks.
Source: CBA; Better Dwelling.
The Size of Mortgages Is Growing Faster Than Borrowers
The number of mortgage accounts is growing fast, but it’s a slower rate than mortgage debt. The Bank of Canada (BoC) data on outstanding mortgages shows annual growth of 7.8% for the same month. Annual growth also set off a multi-year high, coming in at the largest number since 2010. Both the number and size of mortgages are growing at the fastest rates in years.
Canadian banks are holding a record number of mortgages, and it’s growing at the fastest rate in years. Default risk is relatively low, so that isn’t the principal concern here. The bigger issue is the amount of capital diverted from other areas of the economy. Every additional dollar sunk into shelter is diverted from another area. This is going to be a drag on general economic growth, as the economy focuses on just paying for necessities.
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It’s just spectacular to watch anglo-Western economies try to run a ponzi with the developing countries rejecting their funding mechanisms.
No wonder the Eastern part of the world is projected to outpace the West in every possible way by 2030.
When I moved here in the 80s, you got a job and bought a house. It wasn’t easy work (construction), but it paid enough for me to buy a house in a few years and support a family. Now even if you arrive to Canada with a wall of credentials, you won’t be able to own a house for decades. Maybe. If you’re lucky.
Canada used to be a great place for immigrants to come. I don’t think that’s the case, and I wouldn’t have picked it if I had to do it today.
The east is heavily tied to the anglo-Hat tribe world system. If our system fails the east comes down with us. The only nations in the east that can survive this are japan, sk,…probably just those two. Taiwan can only survive with America’s backing so its out. Singapore will get destroyed for obvious reasons, same as hk. Sk might just get nuked so really Japan is the only nation in the east and perhaps the entire world that can survive this. China is a paper tiger and heavily invested in the system.
no one know what the future brings
no one!
There’s not a lot of statistics across the industry for older households not paying off their mortgages, but the perpetual strategy is definitely taking it off.
Let say you know the value of currency will go down in the coming decade (inflation). For example, 100k 10 years down the road can only buy half the stuff or you can earn 100k with half the effort. What should you do now?
You should obviously borrow 100k, buy some stuff that will last and fight inflation. 10 years later its going to take you half the effort tonpay back the loan and you will making a killing spelling that durable good.
Now you know why housing always out performs inflation.
Said everyone in 1980, right before inflation forced interest rates to crush their housing investments and they blew up.
Governments, corporations and individuals are leveraged over their heads.
Even a small 100bps rise will cause debt servicing issues.
Playing the Paul Adolph Volcker Jr card today would trigger WW3.
Why exactly would housing keep up with inflation? Everyone I know gives the example of the 70s; except no one remembers that the 70s were a period of very strong labour unions which kept up the pressure on wages. Unions are now only present in the public sector, adding to the increased tax requirements on the typical homeowner. Inflation picks up, the cost pressures on households increases and there is no compensatory increase in wages. Over indebted Canadian employers have already have had a taste of outsourcing coupled with remote work, so would rather outsource than increase wages. Why else do you think the Globe and Mail is staring to put those articles on the joys of multi generations in a “single family” house. With the BoC and government fully supporting high housing prices, the future is crammed housing full of multiple families, overwhelmed “free” healthcare and education infrastructure, and ever increasing portion of welfare recipients. New immigrants brought to feed the ponzi aren’t stupid to come in and pay, when they could go on welfare and try do cash construction on the side.
All this from policies “for the poor”!
Yes but that was before BoC came up with a new solution to inflation – just lie about it! “We just can’t find any inflation” because we choose how to measure it, and asset price bubbles are not factored in. If it properly factored in the actual inflation individuals experience, we would have raised interest rates long ago. Doesn’t anyone at the BoC buy groceries?
With our country so grossly indebted, and govt obligations tied to cost of living, interest rate suppression (both blatant and via QE) is a desperate attempt to kick the can down the road and maintain the appearance of solvency. Eventually, when interest rates are taken out of the BoC’s hands, all this debt, including personal, municipal, corporate, and federal, is going to bite us badly and haunt us for years.