Mortgage debt balance reaches new highs

Rates of growth were exceptionally strong despite the pandemic year

Mortgage debt balance reaches new highs

The national mortgage debt balance hit a new record high of $1.65 trillion in Q4 2020, according to data from Statistics Canada.

This represented an increase of 2.1% from the quarter prior, amounting to a total of $34.4 billion added during that period alone. On an annual basis, the balance had a 7.1% gain, for a total of $110 billion in residential mortgages accumulated through the pandemic year.

Such rates of growth were exceptional by any standard, real estate information portal Better Dwelling said in its analysis of the figures.

“The quarterly increase of 2.1% is the biggest since Q3 2015. The dollar increase of $34.4 billion is unprecedented for a single quarter,” Better Dwelling said. “Even factoring in the pandemic’s worst quarter, the annual rate of growth … is the highest rate since 2011.”

This strength was even more surprising considering that the growth rate was at multi-decade lows before the pandemic.

“The recession’s low rate environment provided stimulus … likely a welcome and desired effect for policy makers,” Better Dwelling noted. “To say households are comfortable borrowing during the recession is an understatement.”

A recent study by TransUnion pointed to even better growth prospects this year, along with low overall delinquency levels. Sustained market robustness is expected to build on the momentum imparted by government subsidies and payment deferrals during the first few months of the pandemic.

Increased borrowing activity is being “driven in part by recent improvements in economic and labour market activity.” While overall activity was generally still below the levels seen in prior years, balance and origination levels have risen “from the lows observed during the early stages of the COVID-19 pandemic,” TransUnion reported.