Mortgage borrowing set a new record in 2021

The amount of mortgage debt taken on by Canadians set a new record in 2021, eclipsing the previous record set the previous year.

Record house price increases during the year translated into record borrowing that amounted to $187.5 billion in new mortgage debt, Statistics Canada reported in its National Balance Sheet data. That’s well above the previous high of $118.9 billion in 2020 and $79.6 billion in 2019.

In the fourth quarter alone, $46.3 billion in mortgage debt was added, although that was down from the peak of $60.1 billion recorded in the second quarter.

Total mortgage debt now stands at $1.95 trillion, while non-mortgage debt is another $701 billion.

Data from Statistics Canada confirms that variable rate mortgages continued to be the mortgage product of choice for many borrowers in 2021. The share of variable rate mortgage borrowers increased to 28.1 at the end of the year from 18 .5% a year earlier.

The value of residential real estate has soared by $2.5 trillion since 2019

Rapidly rising house prices drove the total value of residential real estate in Canada to $8.7 trillion last year. That’s $1.5 trillion more than in 2020 and $2.5 trillion more than in 2019.

“Since the end of 2020, the value of residential real estate has increased by 23.0%, which represents 65.4% of the increase in household net worth during the same period,” said Statistics. Canada. “Before the onset of the global pandemic, annual growth in the value of residential real estate had reached 14.8% at its peak in 2006.”

The value of real estate as a proportion of household disposable income also continued to grow, reaching 562% in Q4, compared to 538% in Q3.

The household savings rate down

As household debt has risen, the national savings rate has continued to decline from its peak at the height of the pandemic.

“Household disposable income fell 1.3% in the fourth quarter, the second consecutive quarterly decline, mainly due to an 11.9% decline in government transfers to households, while employee compensation rose by 1.9%,” StatCan reported.

This left households with lower net savings, causing the savings rate to drop to 6.4% in the fourth quarter. That’s down from 9% in the third quarter and from a peak of 27.2% in the second quarter of 2020.

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