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Why Mortgages Are Down and Canadians Aren't Buying New Homes

Our recent Market Pulse Quarterly Consumer Credit Trends show new mortgage growth declined by 8.1 per cent in Q4 2021 when compared to Q4 2020. 

Where did mortgage growth decline the most?

The biggest drop in new mortgages was seen in some of the hottest housing markets like Toronto and Hamilton with a 16.1 per cent and 18.7 per cent drop respectively when compared to Q4 2020.

“There’s no question that sky-rocketing house prices have decreased housing affordability across all segments,” said Rebecca Oakes, AVP, Advanced Analytics at Equifax Canada. “In addition to high house prices, lenders have also started to move interest rates up in anticipation of rate rises from the Bank of Canada. This could also be limiting the purchasing capacity of many consumers.” 

 

How much are Canadians paying for their homes?

The average loan amount for new mortgages is at $355K as of Q4 2021. This shows a 

10.1 per cent increase in the average loan amount for new mortgages when compared to Q4 2020. Although the average mortgage loan amount has increased over the last year, it has actually dropped by 1.5 per cent when compared to last quarter (Q3 2021). 

This is the first time that the average loan amount for new mortgages has shown a quarter-over-quarter drop since the pandemic began. Oakes noted this may be a sign of average home prices stabilizing. However, continued demand and lack of supply could lead to further rises in the property prices. 

 

How are mortgage delinquencies affected?

Although mortgage growth has halted, Canadians continue to pay their mortgage loans on time. Overall mortgage delinquencies remained low at 0.11 per cent, compared to non-mortgage delinquencies at 0.86 per cent. This shows a year over year drop of 31.8 per cent in the amount of mortgage delinquencies for Canadian homeowners and lenders. 

We want to help Canadians live their financial best. If you want to learn more about how understanding credit insights and mortgage trends can help minimize risk and increase growth in your business, please contact your Equifax Account Representative. You can also reach us directly at 1-855-233-9226 and follow us on Twitter and LinkedIn.  

 

 Source: Quarterly Market Pulse Consumer Credit Trends

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