credit and debt
A NOT-SO-OUTSTANDING CURRENT TREND: VARIABLE IS A POPULAR WAY TO LEND Unlike their fixed-rate peers, variable-rate mortgage holders continue to be directly impacted by the Bank of Canada's relentless assault on inflation.
In the last edition of the rennie landscape we explored the changing dynamics of new mortgage funds advanced and how much of new mortgage funds were going to fixed mortgages versus variable. We noted that not only was the amount of new mortgage debt increasing, but the share of that debt subject to variable rates was growing. Now that interest rates are higher, and new funds advanced are lower, we turn our attention to the current level of outstanding mortgage funds to see how much debt Canadian mortgage holders have overall.
As of the end of 2022, Canadians held an astounding $1.5 trillion (yes with a T!) in outstanding residential mortgages. That’s up 44% from the $1.0 trillion Canadians owed on their mortgages at the beginning of 2017. What’s more, the share of those funds dedicated to variable-rate mortgages has increased to 1 in 3 (from 1 in 4). All of these borrowers are feeling a direct impact from interest rate increases and are being forced to deal with higher interest costs today (or perhaps not, as we’ll explore later).
RATES AREN’T THE ONLY INCREASING MORTGAGE VARIABLE
$1.8
DECEMBER : 34% variable-rate mortgages
$1.6
$1.4
JANUARY : 25% variable-rate mortgages
$1.2
$1.0
$0.8
$0.6
$0.4
$0.2
$0
FIXED RATE YEARS
FIXED RATE YEARS
VARIABLE RATE
SOURCE: STATISTICS CANADA, TABLE 10-10-0006-01 DATA: MORTGAGE FUNDS OUTSTANDING BY TYPE, MONTHLY, CANADA
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