The belief that low interest rates have meant more borrowers is untrue says CIBC economist Benjamin Tal, who says that regulatory changes could have a dramatic effect on the market.

In his latest report, he highlights that the share of mortgages has remained relatively stable in recent years, even in Toronto, but larger loans have driven the rise in overall mortgage debt and a 6.2% ($82 billion) growth in mortgages outstanding year-over-year.

The debt is generally being well managed, Tal says, with credit scores elevated and delinquency rates lower. He does not see rising mortgage rates meaning a jump in defaults, until the next recession.
On regulation, the CIBC economist says that recent changes to insured mortgages mean that rate rises will have a less significant impact than previous changes.

However, the proposal from OFSI to raise the qualifying rate of uninsured mortgages by 200 basis points could see a drop in mortgage growth from the current 6% to 4%.

Additionally, if there are also lower house prices, mortgage market growth could be half what it is not within a year or so.
 

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