Canada faces a significant mortgage debt increase

Due to the pandemic-caused activity hike at the real estate market, Canadians are increasing their debts in order to enter the market and buy homes.

The latest report by Statistics Canada shows that household mortgage debt was up by 1% in April to $1.69 trillion (US$1.4 trillion), marking the largest increase since 2010. The residential mortgage credit rose by $17 billion, which is the largest monthly gain on record.

The combination of low borrowing costs, restrained supply and strong demand for single-family houses during the COVID-19 pandemic has led to bidding wars and an increase in home values across Canada. The recent results show how much the prices gains are fueling mortgage debt.

According to the Canadian Real Estate Association (CREA), the average home price rose by 38% to $688,208 during the previous year.

Total household credit went up by 0.9% in April and reached $2.49 trillion – it’s the fastest growth since 2011. Meanwhile, Canadians have been reducing their debts on other credit types since the beginning of the pandemic. Although non-mortgage credit showed a small increase in April, it was still below pre-pandemic levels.

Despite news about surging mortgage debts Canadians net worth is also rising very fast. Homeowners enjoy great appreciation of their homes and condos and that bring additional satisfactory feeling to consumers to go out of lockdown, start spending and move economy forward.