Canadian mortgage debt grew by $18 billion in April, biggest monthly gain ever, StatsCan says

Canadians took out almost $18 billion worth of new mortgage debt in April, the fastest monthly increase on record and enough to bring total housing debt to almost $2 trillion.

Statistics Canada reported Friday that while consumers appear to be tightening their belts when it comes to other forms of debt, they seemingly have an inexhaustible appetite to borrow money to purchase and renovate homes.

Canadians had a total of almost $1.69 trillion worth of mortgage debt at the end of April after a $12.9 billion increase in March followed by an even larger one — $17.7 billion — in April. That means total mortgage debt in Canada has grown by 7.8 per cent in the past year.

Lending rates, lockdowns contribute to mortgage debt

Leah Zlatkin, a housing market expert with Lowestrates.ca and principal broker at Brite Mortgage in Toronto, says growing mortgage debt makes perfect sense considering what's happening in the housing market right now.

Home prices continue to climb to an average of just over $688,000 last month — a figure that has increased by 38 per cent in the past year, according to the latest numbers from the Canadian Real Estate Association.

Zlatkin says people are borrowing more because lending is cheap, and pandemic lockdowns compelled them to make their housing situations as pleasant as possible.

"If rates went up I still think the market would continue, because there's going to be a huge influx of people coming to Canada in the next little bit, and they all need a place to live, and they all want to own homes in the cities," Zlatkin said.

Reno boom fuels credit growth

Mortgages aren't the only form of housing debt that's growing. Home equity lines of credit or HELOCs, where owners borrow against the equity in their homes, also rose to a record of just over $262 billion.

That also makes sense to Zlatkin, due to the same pandemic pressures driving mortgage balances higher.

"People who were in the housing market before COVID are sitting on masses of cash, so homeowners are thinking to themselves 'we are stuck here 90 per cent of the time anyway so let's make this place nice, because money is cheap,' " she said.

When the total value of mortgages and HELOCs are added together, that's more than $1.9 trillion worth of housing debt. That's almost as much as the $1.97 trillion that Canada's entire economy is worth, according to the most up to date GDP numbers from March.

Other debt also rising

Non-mortgage debt also increased, but at a much slower pace. That figure ticked up 0.2 in April to reach $782.7 billion but the data agency notes that other forms of debt are still not as elevated as they were at the end of 2019.

"While lower credit card balances persisted, other loan products, such as personal loans and lines of credit, were up in the month," Statscan said.

Driven by that housing debt, total debt loads rose to $2.4 trillion. That's an increase of 0.9 per cent in one month, which is the fastest monthly increase since 2011.