Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Canadian mortgage lending growth has slipped to a fresh low against a mark set back in 2001, and while that reflects the central bank's tightening campaign to tackle stubborn inflation the pace is still faster than recent economic growth.
Household mortgage lending rose 3.3% in March from a year ago according to Statistics Canada data released Friday, from a pace of 3.4% in February. Data revisions showed lending also advanced at a 3.3% pace in January.
Lending growth slowed to 3.0% in April 2001 and earlier that year it was 2.7%, matching the lowest in StatsCan data back to 1991 for year-over-year comparisons, according to MNI calculations.
Lending has slowed from rates around 10% at the start of 2022, though it's still likely running ahead of first-quarter GDP growth expected at less than a 3% annualized pace. The Bank of Canada has hiked interest rates 10 times from about zero to 5% and Governor Tiff Macklem has said a cut is possible at the next meeting on June 5 if there's convincing proof price stability is being restored.
The data suggest monetary policy is working but perhaps with a longer-than-usual lag. Consumers are feeling the pinch of higher mortgage interest costs, which StatsCan said was the major driver of CPI inflation in March with a 25% increase from a year earlier. Other housing market data still suggests pent-up demand. (See: MNI INTERVIEW: Last Thing BOC Wants Is Cut And U-Turn- Stillo)
StatsCan's report Friday also showed non-mortgage credit growing faster than home lending for the first time since at least 2014, with an increase of 3.9%. Households and financial institutions have been resilient to the jump in interest rates, according to the BOC's Financial Stability Report released earlier this month.
Year-over-year growth in household mortgage and non-mortgage loans
Source: Statistics Canada
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.