Mortgage debt growth far outstripping GDP increases – StatCan

Correction risks continue to mount for Canadian households, analysts say

Mortgage debt growth far outstripping GDP increases – StatCan

Over the past decade, Canadian mortgage debt has seen gains almost twice as large as the nation’s GDP growth, according to data from Statistics Canada.

In the 10-year period ending 2021, outstanding residential mortgage credit swelled by 71.5%, far outstripping the GDP increase of 39.3%.

“This puts households at a much greater risk of correction – or at least paying for a bailout,” Better Dwelling said in its analysis of the StatCan figures.

A similar trend has been observed in overall mortgage debt, which has reached nearly three-quarters of GDP (71% as of the second quarter).

Read more: Mortgage debt growth accelerates, but borrowing activity stalls – BoC

During the third quarter alone, new mortgage growth clocked in at 7.7% annually, while the average per capita loan amount for new mortgages grew by 18.3% annually to reach roughly $360,000, Equifax said recently.

This was a phenomenon decades in the making, Better Dwelling said.

“In 1990, the ratio of mortgage debt to GDP was just 34% in Canada. It took 13 years for the ratio of mortgage credit to GDP to rise 6 points, breaking above the 40% ratio,” Better Dwelling said. “In contrast, the past 13 years have seen the ratio increase a whopping 22.7 points. Mortgage debt isn’t just growing faster – growth has been accelerating.”

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