The average new mortgage being taken out by today’s borrowers surged to $360,000 as of the third quarter, reports Equifax.

That’s an 18% jump compared to a year ago, and up 1.4% from the second quarter.

Meanwhile, growth in new mortgage volume moderated to a pace of 7.7%, down from the previous two quarters, which saw year-over-year growth in excess of 20% compared to pre-pandemic periods.

While mortgage growth appears to be moderating, the higher loan amounts could make new borrowers more sensitive to interest rate hikes, which are currently expected by the spring of 2022.

“Future interest rate movements will not only have an impact on consumers with variable interest rate products in the short term, but also could put pressure on some homebuyers with fixed interest mortgages in future years,” said Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada. “Consumers who took advantage of very low rates over the last 18 months on high-value mortgages may feel pressure at the end of their term when they have to renew their mortgage at a much higher rate.”

Overall Consumer Debt is Rising

Total consumer debt, including both mortgage and non-mortgage credit, topped $2.2 trillion, a 7.8% increase from Q3 2021.

Credit card spending saw a boost in the quarter, with the average monthly credit card spending up 3.9% compared to the pre-pandemic period of Q3 2019, Equifax reported.

“Whether it’s pent-up consumer demand, lifting of travel restrictions or higher disposable incomes, Canadians are giving their credit cards a workout heading into the holidays,” Equifax said in its release.

On an individual basis, the average non-mortgage debt load has risen 1.7% over the past year to $20,739.

“The good news is that we saw higher payments and a large fall in non-mortgage consumer debt during 2020 due to government support mechanisms, increased saving levels and reduced credit demand,” Oakes added. “Average non-mortgage debt is still below pre-pandemic levels, but it has been gradually increasing throughout 2021.”

Delinquencies Falling

Despite rising debt levels, delinquency rates continue to fall.

Equifax reports that mortgage loans that are behind payment by 90 days or more have fallen 28.5% since last year. Similarly, non-mortgage loans in arrears are down by 22.2%.

Government support provided throughout the pandemic has been partially responsible for helping to keep delinquency rates low. “We can likely expect a rise in delinquency in the coming months as government benefits came to an end in October for most consumers,” Oakes noted.

The only age group to have seen a rise in non-mortgage delinquency rates was in the 18 to 25 category, with a delinquency rate of 1.05%, up 8% from a year ago.

credit cards debt equifax mortgage credit mortgage rate trends

Last modified: December 2, 2021