Canadian mortgage debts are rising fast

By Gerv Tacadena

Canadian mortgages are growing at the fastest rate in over a year, according to the latest figures from the Bank of Canada.

The overall value of mortgage debt held by institutional lenders was $1.61trn in October, up from 0.56% from the previous month.

"That brings the balance outstanding 4.5% higher, when compared to the same month last year. This is both a new record for the dollar amount, and a multi-month high for growth," said market watcher Daniel Wong in an analysis in Better Dwelling.

Based on the data, the rate of growth in mortgage debts appears to be accelerating quickly. In fact, the one-year growth of 4.5% in October was 28.57% higher than a year before. On an annualized three-month growth basis, the value of mortgage loans was up by 5.7%.

"Annualized growth over the past few months shows how fast the recent movement has been. Basically, a short-period of data is taken, and projected as though it were a whole year. This tells us how fast things are moving in the short-term," he explained.

The annualized three-month growth outpacing the 12-month growth shows that mortgage debts are rising rapidly, which could be due to buyers breaking into the market after being delayed by the implementation of B20 Stress Test Guidelines.

"The mortgage brokerage industry had expressed this would be the situation. After all, we know that people will still buy a house at some point, even if borrowing becomes more difficult," Wong said.

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