Mortgage growth is slowing, but Canada's big banks aren't worried yet
Canada’s biggest banks are warning that mortgage growth is slowing and is expected to stay subdued for the rest of the year, as higher interest rates bite deeper into the economy.
Total mortgage volume growth was in the single-digits at most of the Big Six banks in quarter ended April 30, down from double-digit levels last year.
On top of a slowdown in housing markets, which has dented home values, the banks are also contending with a wave of mortgage renewals that will raise housing costs and strain indebted borrowers.
The Royal Bank of Canada was one of the banks warning that the days of unrelenting mortgage volume growth are ebbing.
“Mortgages grew seven per cent from last year, down from eight per cent growth year over year last quarter,” RBC chief executive Dave Mckay said in a May 25 conference call. “Origination activity is expected to continue moderating towards 2019 levels as limited supply and increased demand from immigration is muted by concerns around affordability. We expect annual mortgage growth to slow to the mid-single digits.”
The total size of RBC’s mortgage book grew 6.5 per cent in the second quarter over the same period last year. That’s down from 11 per cent year-over-year growth reported in the second quarter last year.
The Canadian Imperial Bank of Commerce and the Bank of Montreal shared their own warnings that mortgage growth was softening amid a slowdown in home sales.
The Bank of Nova Scotia, meanwhile, eked out a three per cent gain in its residential mortgage book since last year, but posted a decline of $2 billion — or one per cent — over the previous quarter, according to average assets recorded in company filings.
Scotiabank has been deliberately moving away from the mortgage business
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