A surge in mortgage loans has pushed consumer debt in Canada up to $2.1 trillion.
The higher mortgage loans come despite falling credit card use, as households spend more on their homes and less on other items.
New mortgage borrowing rose 41% in the first quarter compared to the same period in 2020, when the pandemic began, according to consumer credit reporting firm Equifax Inc.
The average limit on new mortgages -- the amount that borrowers were approved for -- jumped more than 20% to $326,930.
The increase in the number and size of mortgages Canadians are taking out drove the country’s outstanding consumer debts to $2.1 trillion despite credit card balances falling to their lowest level in six years, Equifax said.
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.
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 debt.
Excluding mortgages, the size of the average consumer’s debt in Canada fell 4.2% in the first quarter of this year, to $20,430, while non-mortgage delinquencies fell 22% in the same period, Equifax said.
Signs are starting to emerge that the housing market is slowing after hitting a peak in March. A stricter government stress test for mortgages, which came into force earlier in June, will reduce the size of the loans borrowers can takeout.
