Market, mortgage credit continue to acclimate to B-20 changes

by Ephraim Vecina12 Aug 2019

The Canadian market has already largely adjusted to the changes introduced by B-20, with household mortgage credit growing at its fastest rate since 2017.

“Real estate markets continue to adjust to regulatory changes and are now benefitting from a decline in borrowing rates after reaching an eight-year high in late-2018, alongside a tightening spell by the Bank of Canada,” Scotiabank economist Juan Manuel Herrera and research analyst Alena Bystrova stated in a new report, as quoted by Livabl.

Canadian household mortgage credit saw its largest month-over-month increase in two years last June.

By the end of that month, household mortgage credit volume grew by 5.2% from May’s level.

“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,” the duo explained.

June 2019 also saw the outstanding balance of national mortgage debt go up by 3.7% year-over-year, up to $1.57 trillion total.

“The record came with an uptick in the rate of growth, which had bottomed in recent months,” Better Dwelling explained in its analysis of the Bank of Canada figures.

In their report, Herrera and Bystrova stated that acceleration of borrowing activity in non-bank institutions exceeded that of banks. However, non-bank mortgage credit has yet to significantly exceed the long-term average.

“Despite the faster pace of non-bank borrowing growth, it still occupies less than one quarter of market share,” the duo explained.

At present, non-bank lenders account for 21.3% of the mortgage credit market.

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