Mortgage debt in Canada soared above $1.7 trillion in June, growing at a monthly pace never before seen, according to Statistics Canada.
The new figures show mortgage debt grew 9.2% compared to the same time last year, a pace not seen since 2008, and jumped 1.37% since May, which StatCan noted is the largest monthly increase on record.
In the first half of 2021, households have added $81.6 billion in mortgage debt, compared with $108.6 billion over all 12 months of 2020.
Historically low interest rates have spurred demand for housing over the past year, despite record gains in home prices. StatCan added that the Office of the Superintendent of Financial Institutions’ (OSFI) stricter stress test qualification rules for uninsured mortgages came into effect on June 1, “which may have spurred additional borrowing prior to the deadline.”
“While the rise in mortgage debt accelerated, the volume of housing resale activity and the average resale price have been on a downward trend after reaching peaks in March of 2021,” the agency said, noting that there is typically a lag time between the sale of a home and the actual receipt of mortgage funds.
“However, borrowers may also be in the market for a new home, or otherwise be taking additional equity out of their home or consolidating debt when refinancing their existing mortgages,” it added.
Non-mortgage debt also grew in June, led by a 2.7% rise in personal loans and a 1.6% rise in credit card borrowing.
“Credit card debt increased for the fourth month in a row as pandemic-related restrictions eased,” Statistics Canada noted. “Lines of credit also rose by $1.7 billion, but this was fuelled by growth in home equity lines of credit.”
Mortgage borrowing from private non-financial corporations also ticked up in the month, rising 0.9%, or $2.9 billion, to $346.6 billion.