Nov 8, 2010, Canadian mortgage debt surpasses 1 trillion

Canadian mortgage debt for the first time has surpassed $1 trillion, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals released today.

The report also said the vast majority of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments. One in three (35 per cent) mortgage holders have either increased their payments or made a lump-sum payment on their mortgage in the last year. And 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes and 80 per cent have more than 20 per cent equity.

Overall home equity is at 72 per cent of the total value of housing in Canada. For homeowners who have mortgages, equity level averages 50 per cent.

As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in Canada, an increase of 7.6 per cent from last year.

Among homeowners who have mortgages, the average amount of equity is about $146,000, or 50 per cent of the average value of their homes, said the report.

Over the last 15 years, the volume of outstanding residential mortgages has expanded by 194 per cent or a growth rate of 7.5 per cent per year, according to the report.

In 2009, approvals of residential mortgages in Alberta was almost $37.5 billion, up seven per cent from the previous year and representing 15.2 per cent of all approvals in the country.

“Growth (in Canada) was expecially rapid during 2004 to 2008, exceeding 10 per cent per year, but has eased to 7.6 per cent ($71 billion) in the most recent 12 month period,” said the report.

The amount of equity takeout in the past year is unchanged from last year with around one in five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The most common purpose for equity takeout is debt consolidation and repayment (45 per cent) followed by home renovations (43 per cent), purchases and education (19 per cent) and then investments (16 per cent), added the report.

By Mario Toneguzzi, Calgary Herald