Canada sees slowest mortgage growth in over 20 years, with financial strain growing: CMHC

The Canada Mortgage and Housing Corporation (CMHC)’s latest Residential Mortgage Industry Report (RMIR) shows the country’s total residential mortgage debt was at $2.16 trillion as of February, a 3.4 per cent increase from February 2023. This marks the slowest growth in 23 years. 

Slower home sales and prices in many regions, and therefore reported mortgage debt, result from 2023’s higher mortgage costs and uncertainty around a potential decrease in the Bank of Canada’s policy interest rate.

However, CMHC reports the mortgage growth slowdown could come to an end, as it forecasts higher home sales and prices thanks to an anticipated decline in mortgage rates, strong population growth and disposable income increases.

Financial strain on the rise

The latest RMIR shows more homeowners experiencing challenges making monthly mortgage payments and, for the first time since the pandemic’s start, mortgage delinquency rates are trending up.

The national mortgage delinquency rate hit 0.17 per cent in 2023’s last quarter, up from a low of 0.14 per cent in 2022’s third quarter, suggesting that some household’s financial buffers from the pandemic are running out.

Tania Bourassa-Ochoa, CMHC’s deputy chief economist, weighs in: “In a context where debt levels have never been so elevated and households are showing increasing warning signs of financial struggle, household debt vulnerability is becoming a primary area of concern.

As homeowners find it more difficult to manage their monthly budgets, policymakers and the financial sector are on high alert when considering risks to the financial industry and the economy.”

Review the full RMIR here.