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Outlook for Canadian Residential Mortgage Lending
The Canadian housing and mortgage markets have experienced strong growth during the past decade, mainly due to rapid job creation. However, the Canadian economy reversed direction late in 2008, and the housing market has slowed sharply in recent months. Mortgage demand has also slowed, although the volume of outstanding mortgages continues to expand.
Forecasts are that housing market activity will remain comparatively weak during the remainder of 2009. The forecasts suggest that moderate recovery of housing demand may commence during 2010.
- According to the Canadian Real Estate Association, the dollar volume of resale activity may total just over $100 billion in 2009, and $110 billion in 2010, sharply lower than the $160 billion recorded in 2007.
- According to Canada Mortgage and Housing Corporation, housing starts may be in the range of 60,000 units in 2009, and just slightly more in 2010. This would be far below the average of about 229,000 units per year seen during 2004 to 2007.
The available forecasts of housing activity have been used to generate forecasts of mortgage activity: slowing housing activity implies a significant downshift of mortgage demand.
- The volume of outstanding residential mortgage credit is forecast to continue growing, but at a slower rate than in recent years. For 2009, the growth rate is forecast at 7.6%, followed by 7.0% growth in 2010. By contrast, the growth rate was 12.4% in 2007 and 10.4% in 2008.
- About mid-2010, the volume of outstanding residential mortgage credit in Canada would pass $1 trillion, and the total at the end of 2010 would be $1.04 trillion.
- The volume of annual approvals (including new mortgages, transfers of existing mortgages between lenders, and refinances) may fall to about $150 billion in 2009 and $160 billion in 2010. During 2007 and 2008, approval activity exceeded $200 billion per year.
Source: Canadian Association of Accredited Mortgage Professionals – “The Canadian Residential Mortgage Market During Challenging Times”, April 2009
