As of January, residential mortgage debt in Canada stood at $2.08 trillion, an increase of six per cent compared to January 2022, but the rate of growth slowed compared to recent years. Inflation, rapidly rising interest rates, and cooling housing markets across the country weakened consumer confidence in 2022, resulting in fewer consumers looking to purchase a property and, consequently, decelerating mortgage growth in Canada, according to the latest CMHC Residential Mortgage Industry Report (RMIR), which analyses the most recent trends in the residential mortgage industry. Despite slowing mortgage growth, Canadian households still face record levels of mortgage debt.
“With record levels of mortgage debt and the higher cost of living, questions are arising around the ability of Canadian households to make their monthly debt payments,” said Tania Bourassa-Ochoa, Senior Specialist of Housing Research for CMHC. “Although mortgages in arrears remain low, they are a lagged indicator and in challenging financial situations, consumers will typically be delinquent on credit cards, lines of credit, or auto loans before mortgages. Increasing delinquencies for these credit products indicate a larger number of consumers are having difficulties with their debt payments.”
The CMHC said the latest RMIR also shows consumers are reacting to rising interest rates by choosing options to reduce their monthly debt servicing costs:
- Mortgage borrowers are opting for shorter-term fixed-rate mortgages in expectation of decreasing interest rates in the future.
- Fixed-rate five-year mortgages fell to less than 15 per cent of new mortgages, with many consumers opting for 2-3-year fixed rates, and variable-rate mortgages dropping to less than 20 per cent of new mortgages.With cost of debt being more expensive, fewer mortgage borrowers are applying for refinancing, as the data shows a 32 per cent drop in refinances in 2022.
- More mortgage borrowers are choosing longer amortization periods, meaning they will be paying down their homes over a longer period of time, but for the short-term reducing their mortgage payment.
Download and read the entire Residential Mortgage Industry Report (RMIR) on the CMHC website.
You can view the podcast breaking down CMHC’s latest Residential Mortgage Industry Report (RMIR) on our YouTube channel.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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