credit and debt
TIME TO GIVE US SOME CREDIT—WE WEREN’T GETTING IT FOR A WHILE Canada enjoyed two years of slowing growth in mortgage and consumer credit; those days appear to be over for now.
Rates of growth in residential mortgage and consumer (non-mortgage, non-business) credit have been consistently positive in Canada over the past five years, meaning that overall debt has increased. That mortgage and consumer credit has been rising faster than population growth also means per capita debt has been rising. Having said that, the pace of mortgage and consumer credit growth across Canada slowed betweenmid-2017 and the end of 2018, and the period during which the Bank of Canada raised
its key lending rate five times, longer-term interest rates (including onmortgages) marched upwards, and financial institutions tightened their belts—at least insofar as lending was concerned. Most recently, the pace of bothmortgage and consumer credit has begun to rise again. The rate of mortgage credit growth in particular, at 4.9% currently, is a metric to watch, particularly in its capacity as both a driver to, and indicator of, housing market changes.
GROWTH IN MORTGAGE CREDIT RISING, CONSUMER CREDIT SLOWING
7.0%
6.0%
5.0%
4.90%
4.0%
3.0%
2.42%
2.0%
1.0%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0.0%
CONSUMER CREDIT
RESIDENTIAL MORTGAGE CREDIT
SOURCE: BANK OF CANADA DATA: YEAR-OVER-YEAR CHANGE IN CREDIT
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