Canada's mortgage growth has fallen to the lowest in nearly two decades as interest rates rise and after
Total residential mortgage credit grew just 0.3% on average over the last three months, the slowest since 2001, Bank of Canada data show. That's down from 0.47% at the end of 2017, and about half the average 0.57% pace over the past 20 years.
Outstanding residential mortgage loans in Canada now total C$1.53 trillion (U.S.$1.19 trillion), the data show.
Borrowing costs are rising for the first time in almost a decade, and recent rule changes are making it tougher to get a mortgage. Just how sensitive consumers – and the economy – will be to higher rates has become a key question for policy makers, with Canadians now holding a record C$1.70 (U.S.$1.32) in debt for every dollar of disposable income.
Dominique Lapointe, an economist at the University of Ottawa's Institute of Fiscal Studies and Democracy sees slowing credit growth as a potential headwind for Canada's economy, at least in the short run.
"In the near term, it's bad for growth. In the longer-run, when it leads to deleveraging, it's good for financial stability. What matters is the speed of deceleration, or contraction, in credit," Lapointe said in an email.