Canadians added $12.9 billion in March, added $17.7 billion in April, and added nearly $1.69 trillion in mortgage debt at the end of April. This means that the total amount of mortgage loans in Canada has increased by 7.8% in the past year.

Loan interest rates, the blockade leads to mortgage debt

Leah Zlatkin, a real estate market expert at Lowestrates.ca and chief broker of Toronto Brite Mortgage, said that the growing mortgage debt is completely reasonable given the current real estate market.

Last month, house prices continued to climb to just above the average of $688,000—a figure that has increased by 38% in the past year. According to the latest data from the Canadian Real Estate Association.

Zlatkin said people borrow more because loans are cheap, and the pandemic blockade has forced them to improve their housing conditions as much as possible.

“If interest rates rise, I still think the market will continue, because in the next short period of time there will be a large influx of people into Canada. They all need a place to live, and they all want to own their own house in Canada. City,” Zlatkin said.

Reno boom drives credit growth

Mortgage loans are not the only form of housing debt that has grown. The home equity credit line, or HELOC (owners borrowing on their home equity), also rose to a record high of just over $262 billion.

This also makes sense for Zlatkin, because the same pandemic pressure will push up mortgage balances.

“The people who entered the real estate market before COVID were sitting on a lot of cash, so homeowners were thinking,’We are stuck here 90% of the time anyway, so let’s make this place better because the money is cheap. ‘”she says.

When the total value of the mortgage and HELOC are added together, this is housing debt worth more than $1.9 trillion. This is almost equivalent to the value of Canada’s entire economy of US$1.97 trillion, According to the latest GDP data in March.

Other debts are also rising

Non-mortgage loans have also increased, but at a much slower rate. This figure rose by US$0.2 in April to US$782.7 billion, but the data agency pointed out that other forms of debt are still not as high as at the end of 2019.

Statscan said: “Although credit card balances have continued to decline, other loan products, such as personal loans and credit lines, have increased this month.”

Driven by housing debt, the total debt burden rose to US$2.4 trillion. This was an increase of 0.9% in one month, which was the fastest monthly increase since 2011.