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Residential mortgage debt hits $2.16 trillion amid slowest growth in 23 years: CMHC

OTTAWA — Canada Mortgage and Housing Corp. says the country’s total residential mortgage debt totalled $2.16 trillion as of February this year, up 3.4 per cent year-over-year and representing the slowest growth in 23 years.

The federal housing agency says in a new report that higher mortgage costs and uncertainty around the Bank of Canada potentially lowering its key interest rate led to softer home sales and prices across many regions in the second half of 2023.

However, it expects the rate of growth for mortgage debt to increase amid forecasts of higher home sales and prices in the coming years. It says an anticipated decline in mortgage rates, along with population growth and increases in real disposable incomes will likely fuel the turnaround.

The report also says borrowers are continuing to opt for shorter-term, fixed-rate mortgages despite lenders offering large discounts on five-year, fixed-rate mortgages, suggesting an expectation that interest rates will fall in the coming years.

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Terms ranging from three years to less than five years remained the most popular choice, representing nearly 40 per cent of all lending for newly extended mortgages in February 2024. Variable-rate mortgages accounted for 15 per cent of all lending for newly extended mortgages.

The report also shows the national mortgage delinquency rate hit 0.17 per cent in the fourth quarter of last year, still near historic lows, but trending up for the first time since the beginning of the pandemic.

This report by The Canadian Press was first published May 29, 2024.

The Canadian Press