Mortgage Surge Pushes Canada Consumer Debt to $1.7 Trillion

A surge in mortgage borrowing is pushing consumer debt loads higher in Canada despite falling credit card use, as households plow more money into their homes while spending less on everything else, Bloomberg News reported. New mortgage borrowing rose 41% in the first quarter compared to the same period in 2020, when the pandemic began, according to a release Tuesday from consumer credit reporting firm Equifax Inc. The average limit on new mortgages -- the amount for which borrowers were approved -- jumped more than 20% to C$326,930 ($270,490). The increase in the number and size of mortgages Canadians are taking out drove the country’s outstanding consumer debts to nearly C$2.1 trillion ($1.7 trillion), despite a drop in credit card balances to their lowest point in six years, Equifax said. “Lower interest rates, multiple lockdowns and higher unemployment rates have led to changes in consumer behavior,” Rebecca Oakes, assistant vice president of advanced analytics at Equifax’s Canadian unit, said a press release accompanying the report. “Competition among home buyers is fierce in many markets across the country.” The pandemic has helped spur a record boom in Canada’s housing market as rock-bottom interest rates and new demand for bigger living spaces has fueled bidding wars for ground-level homes. With a number of provinces going in and out of lockdown throughout the past 15 months, Canadians have also had fewer opportunities to spend on everything from restaurants to clothes to entertainment. A higher savings rate, combined with emergency income support from the government, has played into the housing boom while also helping consumers pay down their credit card debts. Read more.