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Canadian mortgage debt rose $ 18 billion in April, biggest monthly gain on record, according to StatsCan

Canadian mortgage debt rose $ 18 billion in April, biggest monthly gain on record, according to StatsCan

Canadians took on nearly $ 18 billion in new mortgage debt in April, the fastest monthly increase on record and enough to bring total housing debt to almost $ 2 trillion.

Statistics Canada reported on Friday that while consumers appear to be tightening their belts when it comes to other forms of debt, they seem to have an endless appetite to borrow money to buy and renovate homes.

Canadians had total mortgage debt of nearly $ 1.69 trillion at the end of April after an increase of $ 12.9 billion in March, followed by an even larger increase – $ 17.7 billion – in April. This means that total mortgage debt in Canada has increased 7.8% over the past year.

Loan rates, lockdowns contribute to mortgage debt

Leah Zlatkin, housing expert at Lowestrates.ca and senior broker at Brite Mortgage in Toronto, says growing mortgage debt makes perfect sense given what is happening in the housing market right now.

Home prices continue to climb to an average of just over $ 688,000 last month – a figure that has risen 38% in the past year, according to the latest figures from the Canadian Association of Housing. building.

Zlatkin says people are borrowing more because loans are cheap and pandemic lockdowns have forced them to make their housing situation as pleasant as possible.

“If the rates were to go up, I still think the market would continue, because there is going to be a huge influx of people coming to Canada in the next few moments, and they all need a place to live, and they all want to own one. house in the cities, ”Zlatkin said.

Reno boom fuels credit growth

Mortgages are not the only form of real estate debt that is growing. Home equity lines of credit or HELOCs, where homeowners borrow against the equity in their homes, also hit a record high of just over $ 262 billion.

It also makes sense to Zlatkin, due to the same pandemic pressures that are pushing mortgage balances up.

“People who were in the housing market before COVID are sitting on heaps of money, so homeowners are like ‘we’re stuck here 90 percent of the time anyway, so let’s make this place nice, because the money is not expensive, “” she mentioned.

When the total value of mortgages and HELOCs are added up, that’s over $ 1.9 trillion in real estate debt. That’s almost as much as the $ 1.97 trillion that the entire Canadian economy is worth, according to the most up-to-date GDP figures for March.

Other debts are also increasing

Non-mortgage debt has also grown, but at a much slower pace. That figure rose 0.2 in April to $ 782.7 billion, but the data agency notes that other forms of debt are still not as high as they were at the end of 2019.

“While the decline in credit card balances persisted, other loan products, such as personal loans and lines of credit, increased during the month,” Statscan said.

Driven by this real estate debt, the total indebtedness reached 2,400 billion dollars. This is an increase of 0.9% in one month, which is the fastest monthly increase since 2011.

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