Canada’s household mortgage credit grew at its fastest pace in two years, even as the average household savings rate shrunk to its lowest level in 59 years.
According to Scotiabank, the nation’s household mortgage credit saw its largest month-over-month increase in two years last June, with a growth rate of 5.2%.
The same month also saw the outstanding balance of Canadian mortgage debt grow by 3.7% annually, up to $1.57 trillion total.
“Mortgage growth has surely rebounded after a period of deceleration from early-2017 to its mid-2018 trough which was induced by a series of measures aimed at tackling runaway home prices,” Scotiabank economist Juan Manuel Herrera and research analyst Alena Bystrova wrote in their report.
Meanwhile, Statistics Canada figures showed that overall household savings during the second quarter of 2019 was just at $2.2 billion, declining by a massive 78% from the Q1 level.
The unadjusted household savings rate also fell to 0.7% during Q1 2019, which was 63.2% lower annually. This was the weakest reading in more than five decades.
“Household savings have been on the slide, but it rarely reaches this point,” Better Dwelling stated in its analysis of the data. “It’s not an encouraging sign when savings rates top out at the same time as credit growth.”
“Canadians are putting away the same amount of cash they did 40 years ago, with a much bigger population.”