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Canada’s Average Mortgage Amount is Rising (Maybe Faster Than We Think)

Nov. 27, 2020
3 mins
A person uses a calculator while holding a tablet at a desk covered with jars of coins

Canada’s average mortgage size is growing at almost three times the rate of inflation.

New data from TransUnion suggests mortgage balances increased by an annualized 5% in the third quarter. But there’s reason to believe mortgage amounts are ballooning even faster than that.

TransUnion’s recently released Q3 Industry Insights Report puts the average outstanding mortgage at $286,669, up from $273,577 the prior year.

“While consumer spending habits have yet to revert back to pre-pandemic levels…some credit markets, such as mortgages, are seeing an influx of new activity and improved performance,” the report noted.

“Mortgages…experienced higher growth and demand largely due to higher housing prices and extremely low interest rates benefiting the refinance activity.”

Data may not capture the full picture

But TransUnion’s data is an average. That means it’s weighed down by small mortgages, such as those that will be completely paid off in the next few years.

By contrast, brand new mortgages being taken out today are larger, driven higher by the recent surge in home prices. As of October, the average house price in Canada reached $607,250.

The Canada Mortgage and Housing Corporation (CMHC) has pegged average new mortgages at almost $300,000 as of the second quarter of this year. The average climbs higher when looking at just British Columbia ($397,844) and Ontario ($363,427).

Mortgage growth in perspective

What does a 5% rise in mortgage sizes mean to your wallet?

Based on today’s lowest nationally available 5-year fixed uninsured mortgage rate of 1.74%, and all else equal, it means:

  • A $54-higher monthly mortgage payment
  • $1,043 more interest paid over a 5-year term
  • A total 5-year cost increase of $14,135

Should the pace of mortgage growth hold steady, average mortgage balances would be on track to top $300,000 in 2021 and $314,789 in 2022.

While no one wants to pay more interest, the upshot is that rising mortgage balances generally correlate with rising home values. And rising home values imply greater price appreciation.

In Canada, price appreciation is a tax-free gain when you sell your primary residence. That’s a powerful offset to mounting interest expense, without which, your golden years may not be so golden.

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Compare Mortgage Rates

Engaging a mortgage broker before renewing can help you make a better decision. Mortgage brokers are an excellent source of information for deals specific to your area, contract terms, and their services require no out-of-pocket fees if you are well qualified.

Here at RATESDOTCA, we compare rates from the best Canadian mortgage brokers, major banks and dozens of smaller competitors.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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