Canadian mortgage growth continues to underwhelm. Bank of Canada (BoC) numbers show outstanding residential mortgage credit hit a new record high in January. The record was dwarfed by the slowest annual pace of growth for a January in over three decades.

Canadians Owe Over $1.5 Trillion In Residential Mortgage Credit

The outstanding balance of mortgage credit at institutional lenders reached a new record high. The balance reached $1.547 trillion in January, up just 0.06% ($1 billion) from the month before. This represents an increase of 3.2% compared to the same month last year. The monthly pace is as small as it sounds, but the annual pace is better than the month before.

Canadian Outstanding Mortgage Credit

The outstanding balance of Canadian mortgage credit.

Source: Bank of Canada, Better Dwelling.

The monthly change and the annual change both made interesting moves. The monthly growth rate of 0.06% is the second slowest for January since 2001, last year claiming the slowest. The annual pace of growth is 38.46% lower than last year, which also made it the slowest January since 1983. On the bright side, the annual pace of growth was higher than the month before. It’s way too early to tell if the trend is reversing or making a DCB, but the direction isn’t 100% clear.

Mortgage Growth May Return Soon… Maybe

Annualizing the past three months of data, we could see the 12 month trend rise. In order for the 12 month trend to rise, a series of 3 month annualized data will print larger numbers. In plain English, the 3 months of annualized growth will be larger than the 12 month, before we see growth.

Canadian Outstanding Mortgage Credit Change

The 12 month percent change, and 3 month annualized change, of outstanding Canadian mortgage credit at large institutional lenders.

Source: Bank of Canada, Better Dwelling.

The 3 month annualized pace of growth is currently higher. The pace reached 3.9% in January, 21.87% higher than the 12 month pace of growth. This is the second month the 3 month was larger than the 12, but don’t get too excited. Last year there was a similar trend, that just fizzled out the next month.

There were some positive notes for growth, but most indicators weren’t great. Both the short-term and 12 month annualized pace of growth improved from December. It could be a sign that we’ve reached a bottom, and things are starting to reverse. That’s likely wishful thinking however, since it was the slowest January in three decades.

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