The strong demand for housing has prompted Canadians to pile on mortgage debt at the sharpest pace on record, amid historically low interest rates.
According to Statistics Canada, household mortgage debt grew by $23.6 billion May and June, marking an increase of 1.4%, and the sharpest monthly rise on record. Since June 2020, mortgage borrowing is up 9.2%—the highest increase since October 2008. In the first half of the year alone, households have accumulated $81.6 billion in mortgage debt, compared to the $108.6 billion added over the entirety of 2020.
The sharp increase in mortgage borrowing suggests that there was strong demand for more spacious housing during the Covid-19 pandemic, which has sent home prices skyrocketing to repeated highs. However, real estate activity has cooled in recent months following a peak in March, but as Statistics Canada notes, there is typically a lag between the transaction of a property and the actual receipt of mortgage funds.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
