Canadians are actually borrowing at a slower rate, despite the outstanding mortgage balance reaching a new record high in July.
Bank of Canada figures pegged the rate of annual mortgage growth at 2.6% lower than the pace in July 2018.
“There’s been some short-term improvements in mortgage credit growth, but not a lot. Over the past few months we’ve seen the 12-month rate of growth rise, compared to previous months,” Better Dwelling stated in its commentary on the BoC numbers.
“This past July was the slowest 12-month increase for the month since 1995. Home sale volumes are improving, but not enough to drive mortgage growth to normal levels.”
The overall residential mortgage balance reached $1.58 trillion in July, growing by 3.8% annually and 0.5% from June.
This came in the wake of Canadian household savings dropping to their weakest level (0.7%) in 59 years during the first quarter, per StatsCan data.
Better Dwelling noted that this was 78% lower compared to Q4 2018 and around 63.2% lower annually.
“Household savings have been on the slide, but it rarely reaches this point. It’s not an encouraging sign when savings rates top out at the same time as credit growth,” the market information portal warned.
“Canadians are putting away the same amount of cash they did 40 years ago, with a much bigger population.”