August 8, 2017

New mortgages continue to rise in Canada

In Canada1 there were just over one million new mortgage loans in 2016, for a 1.4% increase compared to 2015.2 Out of these loans, 39.6% were extended to new-owners and 9.5% to homeowners moving to a new home.

From 2015 to 2016, the number of new mortgages extended to new owners in Canada declined by 1.3% and the number of consumers refinancing their existing mortgage for a larger amount increased by 3.8%. The growth in refinanced loans in Vancouver and Toronto and their surrounding areas implies that existing homeowners are leveraging larger amounts of home equity.

Growth in new mortgage loans was mostly supported by existing homeowners who refinanced or renewed their mortgages with a new lender: 21.4% (or 219,897 loans) of the new mortgages were extended to homeowners asking for a larger mortgage loan amount; this category grew by 3.8% from the previous year. Renewals with a new lender, making up 15.9% (or 163,128 loans) of the new loans, increased by 5.2% from the previous year.

1 Equifax covers approximately 85% of the mortgage market.

2 All figures presented in this report are CMHC calculations based on Equifax data.

Share of new mortgage holders by type, Canada, 2016

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Share of new mortgage holders by type, Canada, 2016
Owner Movers 10%
Refinances 21%
Renewals with a New Lender 16%
New Owners 40%
Multiple Mortgage Holders 14%

CMHC’s method to create the estimates

The source data doesn’t have information on the origination categories of the loans. CMHC creates estimates based on characteristics found on the consumers’ credit report such as:

  • New owners: Consumer did not have a mortgage last quarter but have a mortgage this quarter.
  • Owner movers: Consumer had a mortgage in the previous quarter and the current quarter but, the address changed.
  • Renewals with a new lender: Consumer had a mortgage in the previous quarter, opened a mortgage in the current quarter, the address is the same, the total mortgage balance is same, lower or increased by less than 10% and the number of mortgages on the report is the same.
  • Refinances: Consumer had a mortgage in the previous quarter, opened a mortgage in the current quarter, the address did not change, the total mortgage balance increased by more than 10% and the number of mortgages on the report is the same.
  • Multiple Mortgage Holders: Consumer had a mortgage last quarter, opened a mortgage this quarter, the address is the same, total mortgage balance increased by more than 10%, and the number of mortgages increased.

Note: Renewals with same lenders are usually not captured as the open dates on the consumer reports don’t change and the mortgages won’t be detected as new following this methodology.

Source: CMHC Calculation based on Equifax Canada data.

Regional particularities

British Columbia and Ontario are the only provinces to record growth in almost all types of mortgage categories, with refinances being among the fastest growing category in both provinces. In Ontario, refinance activity was especially concentrated in the Census Metropolitan Areas (CMAs) bordering Toronto, including Hamilton, Oshawa, Barrie, and St. Catharines- Niagara. All of British Columbia CMAs recorded very strong double-digit growth in refinance activity and large increases in the number of consumers with multiple mortgages.

At the other end of the spectrum, Alberta, Saskatchewan, and Newfoundland and Labrador recorded significant declines in the number of loans issued for a purchase.

In Quebec, there were fewer mortgages issued to new owners in 2016 than in 2015 but owner movers continued to grow moderately.

Growth by sub-groups of new mortgage holders, 2015 to 2016, Canada and provinces

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Growth by sub-groups of new mortgage holders, 2015 to 2016, Canada and provinces
  Owner Movers & New Owners All Others*
Newfoundland and Labrador -10.6% -7.3%
Alberta -15.6% -6.7%
Saskatchewan -11.7% -6.6%
New Brunswick -0.7% -4.4%
Nova Scotia -1.3% -3.7%
Prince Edward Island 6.6% 0.5%
Manitoba 5.3% 1.9%
Ontario 2.0% 3.3%
Quebec -0.9% 3.5%
British Columbia 8.0% 17.6%
Canada -0.6% 3.4%

* “All Others” includes refinances, renewals with a new lender, and multiple mortgage holders.

Source: CMHC Calculation based on Equifax Canada data.

View the Homeowners’ Debt at a Glance Data Tables

Canada

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