How much mortgage is too much?

You’ve probably heard over and over again that household debt in Canada is climbing to record levels.

And it’s probably not a surprise to you that mortgages due to the high cost of housing holds some blame there.

But did you know that the total amount of mortgage debt in Canada has nearly doubled in the last four years?

According to CAAMP the total national mortgage debt in 2008 was $664 billion. It now stands at a total of $1.2 trillion.

Over in the Vancouver Sun Barbara Yaffe sees this stat and seems to blame the little transaction fees for the high cost of housing.

But there’s a little four letter acronym conspicuously missing from her article: CMHC.

That would be the Canadian Mortgage and Housing Corporation, which has been flooding the market with insured mortgage money at a time of low interest rates.

So here’s the real question: Is Canadian mortgage debt so high because of our house prices, or are our house prices so high because of that mortgage debt?

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jesse
Member

House prices are because of buyers, I like to think

paulb
Member

New Listings 194
Price Changes 119
Sold Listings 90
TI:16585

http://www.paulboenisch.com

It's simple
Guest
It's simple

dear PAUL B can we get Friday’s #’s + can you put the day that you miss on a day when you have time. THANX

mosesupposes
Guest
mosesupposes

“According to CAAMP the total national mortgage debt in 2008 was $664 billion. It now stands at a total of $1.2 trillion.”

Jesus Christ – that is the scariest stat I have seen in some time.

How can anyone look at that and not freak out about the future of this country?

rp1
Guest
rp1

#4 maybe they expect it will be 2.4 trillion or higher by 2018.

knitting rope
Guest
knitting rope

hi everyone, sitting in the rocking chair here, rockin’ back and forth and knitting rope. That rope was 6.64 feet long in 2008, but i’ve had to return to the chair and make it longer, because of a screw up with a hanging…. it’s now 12 feet long, which allows for a 2 ft extra clearance for the minimum weight. Check my table to see what i’m talkin’ about: http://en.wikipedia.org/wiki/Official_Table_of_Drops

knitting rope
Guest
knitting rope

short position Bank of Nova Scotia, BNS
Sept 30, 19,430,870
Oct 15, 24,352,579
Increase: 4,921,709

Mic
Guest
Mic

Canadian household debt continues to reach record levels. I remember seeing it charted against other developed countries before but can’t remember where that was.

When will we hit the point where CDN debt reaches the highest level EVER for a developed nation?

FYI
Guest
FYI

did you guys visited any care dealerships recently? I am in the market for new car. Basically anybody who has pulse will get any car. Just “sign & drive” LOL
i told sales manager that i am putting 20k down payment and he nearly fall from the chair. he said he did not have anybody with that kind of down payment for at least a year!!!

Randy Randerson
Guest
Randy Randerson

The classic problem of whether the chicken or the egg come first.

I blame it on the Conservative govt for pandering to the house horny public.

bubbly
Member
bubbly

$1.2 trillion of mortgage debt alone is 2/3 of Canadian GDP.

ILoveCharts
Guest
ILoveCharts

I’m a bear but I want to point out that there has been some confusion about the stats related to total mortgage debt in Canada.

See this article:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/09/half-baked-mortgage-news.html
“In 2011 banks had to adopt International Financial Reporting Standards (IFRS). That required them to “reclassify” existing securitized mortgages and reflect them on their balance sheets. Prior to November 2011, banks held these same mortgages “off balance sheet.”

If you look at page S17 of this Bank of Canada document cited by Huffington Post, you’ll see a $259 billion jump in mortgages on bank balance sheets in November 2011. Roughly $250 billion of that was due merely to this accounting rule change.”

Does this same accounting issue apply to the numbers in this VancouverCondo.info post?
“According to CAAMP the total national mortgage debt in 2008 was $664 billion. It now stands at a total of $1.2 trillion.”

2.79% 5 yr. NEVER AGAIN
Guest
2.79% 5 yr. NEVER AGAIN

“short position Bank of Nova Scotia, BNS
Sept 30, 19,430,870
Oct 15, 24,352,579
Increase: 4,921,709”

Ya so what? They are all down 5% (the amount of most down payments)

“am putting 20k down payment and he nearly fall from the chair. he said he did not have anybody with that kind of down payment for at least a year!!!”

Really? I paid cash for my car last year.

Barb Rennie
Guest
Barb Rennie

Car sales are a great indicator of consumer spending. People don’t trade in their cars if they are drowning in mortgage payments, credit card payments and taxes. Getting a car loan you can’t possibly afford on top of everything else would be the last straw. HELOC’s run out and buying a new car will have to wait until their piggy banks (otherwise known as their 5% down homes) appreciate in value.

Betty
Guest
Betty

I Love Charts:

Thanks for that bit of info. So in real terms, it was 664+250= $914 Billion in 2008. Now it is $1,200 Billion.

I can also tell you that people refinanced (homeowner Helocs) to the tune of approx. $100 Billion in 2009 when they thought the world was coming to an end. They started to pull equity out of their homes. When they saw it wasn’t most reinvested the money in equities.

So that $914 Billion is really a little over $1,000 Billion.

So 2008-2013 —> $200 Billion increase.

Anyone want to calculate what inflation takes out. Final number could only be $100 Billion increase in real terms. Amazing!

Betty
Guest
Betty

Also RBC said,

“Credit trends supportive of Bank of Canada standing
pat near-term.”

===> means no Bank of Canada rate hikes over the next few years. Mortgage growth has been reduced to the 3% annualized range. Just a bit higher than population growth. If prices hold, then a soft landing will have been achieved. When fuel may be needed in the future, maybe extend amortizations again? comments?

This is good for Canada. I am proud.

ILoveCharts
Guest
ILoveCharts

Hi Betty,

I think that you have provided a fair assessment of the best case scenario.

But let’s remember:
– There is no guarantee that the CAAMP numbers weren’t corrected. I haven’t seen the source but it might already be corrected.
– Do you have any source on the $100 billion that people took out in a HELOC and invested in equities? Are you sure they didn’t invest it in vacations and countertops?
– I haven’t done the math on the inflation numbers but my gut says that it can’t erase $100 billion.

patriotz
Member

@10: “The classic problem of whether the chicken or the egg come first.”

No it’s the problem of whether the drug (access to easy credit) or the addiction (debt) comes first.

Which is such a simple question it’s not even a problem.

George
Guest
George

Sitting on an un-moving train due to “system-wide delays” on skytrain this morning. The boss is not going to be happy that I will be late. Its problems every other day with transit now whether it be bus or skytrain. I am so sick of this overstreched overpriced transit system. Why is skytrain constantly breaking down this year? I suspect Translink is cutting corners on maintenance.

George
Guest
George

I was on a skytrain a few days ago and the train was scraping against the sides of the guideway the whole trip. The train was not aligned on the track properly. In 25 years of riding skytrain I have never experienced that. That can’t be good for the train or the guideway

George
Guest
George

Translink is telling us there are track problems in two different areas– main street and patterson. What are the chances of track problems in two totally different areas happening at the same time? This is a broken transit system!

George
Guest
George

Translink is now saying the track is damaged between main and broadway. Maybe the trains scraping against the side of the guideway damaged it.

George
Guest
George

Now tranlink is calling it “major damage” to the track and it will take a “substantial amount of time”. They are setting up buses for people.

George
Guest
George

My job is on the line. My boss prefers to hire people with vehicles and this proves to him transit is unreliable. Still stick on the train.

jesse
Member

“whether the drug (access to easy credit) or the addiction (debt) comes first”

If I try alcohol I cannot guarantee I won’t become addicted, but from what I see most can stop any time they want.

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