Online mortgage application form on a digital tablet
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Canada Mortgage and Housing Corporation (CMHC) says residential mortgage debt grew by 9% last year compared with a year earlier for the fastest pace of growth since 2008.

The federal housing agency says in its latest report on mortgage trends that the growth was driven by increases in both the value and volume of uninsured mortgages for property buying and refinancings.

Banks saw a 43% increase in new mortgage originations and an increase of 22% for refinances compared with 2020, leading to an additional $400 billion in residential mortgages on their balance sheets, while credit unions added $54 billion.

Activity in the housing market has however slowed considerably in recent months as central banks raise interest rates to slow inflation. On Wednesday the Toronto Regional Real Estate Board said sales were down 41% in June compared with last year, while on Tuesday Real Estate Board of Greater Vancouver said regional home sales were down 35% in the month.

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CMHC says that variable rate mortgages were increasingly favoured last year as the discount on interest rates increased, with the mortgage type growing to 53% in the second half of the year, from 34% of total mortgages in the first half.

The Bank of Canada has however warned that those who recently bought with variable rate mortgages, especially those who stretched to buy a home in the frothy market, could see significant increases in monthly payments on renewal.

CMHC says that the buoyant housing market last year helped push down mortgages in arrears, which fell across all lender types.

In looking at inequality in the housing market, the report noted that Indigenous, Black, Arab and Latin American populations had significantly lower homeownership rates than the national average as of the 2016 Census.

It found that these groups, along with Filipino Canadians, also had lower average property values than other Canadians, a gap that has increased since the 2006 census. It said that since housing wealth is a strong indicator of economic success of future generations, any large deviations between population groups are an indication that inequalities will persist.