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MNI: Canadian Mortgage Growth Ebbs, Matching 2001 Low


Canadian mortgage lending growth matched the slowest since 2001 in June, the month the central bank resumed raising interest rates to tackle stubborn inflation.

Household mortgage lending rose 3.8% in June from a year ago according to Statistics Canada data released Friday. According to MNI calculations that matches the gain set in Feb 2019 and that pace is the slowest since a 3.5% increase in May 2001. Earlier in 2001 lending slowed to 2.7%, the lowest in StatsCan data back to 1991 for year-over-year comparisons.

Lending growth has slowed since May of last year, when the pace was 10.4%. The Bank of Canada began a series of eight interest-rate hikes in March of last year, including a shock 100bp move last July. Governor Tiff Macklem signaled a pause early this year before returning with hikes in June and July to the highest since 2001 at 5% and has said he may need to to more with persistent upside inflation risks. Most economists say he will pause again at next month's meeting, though a recent CPI uptick presents risks of another move now.

The mortgage data by itself backs up Macklem's view that tighter monetary policy is working but perhaps with a longer-than-usual lag. (See: MNI INTERVIEW: BOC Can Wait On Rate Hike- UofT Researcher) Consumers are feeling the pinch of higher interest costs, which StatsCan said earlier this week are up a record 31% from a year earlier in July. Other housing market data still suggests pent-up demand. (MNI INTERVIEW:Vancouver Housing Revives After BOC Hit-Realtors)

Separate reports Friday showed both sides of the argument, with StatsCan also showing residential construction down 8.2% in the second quarter and the Teranet housing price index up 2.4% in July, the second-fastest gain on record.

Source: Statistics Canada

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

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