Largest declines seen in Vancouver and Toronto
As mentioned before, fewer new mortgages were issued in Canada in 2017 than in 2016. The largest declines came from the two most expensive markets, Vancouver and Toronto. Examining the different census metropolitan areas (CMAs), we see that Calgary and Edmonton also had large declines in all new mortgages categories.
In Vancouver and Toronto, new taxes3 for reducing speculative activity in the housing market may have caused this weaker activity. Why do we think this? Because sales dropped following the introduction of the taxes. In Calgary and Edmonton, demand for housing continued to slow due to challenges in the energy sector.
For Canada, the largest decrease in new lending activity was in the renewals with a new lender category. In Vancouver and Toronto, decreases in this category were larger than average, at 33.3% and 25.7%, respectively. The decline in this category was found in most of the major CMAs, including Calgary (25.6%), Ottawa-Gatineau (23.9%), Halifax (21.3%) and Montréal (15.95%).
Vancouver and Toronto also showed declines in repeat buyers (21.7% and 17%, respectively). In contrast, this category remained relatively unchanged in the rest of Canada. The declines in Vancouver and Toronto could therefore be an indication of affordability issues in the two cities. Existing owners may have preferred to remain in their properties, expecting:
- difficulties finding a new property within their means; or
- difficulties selling at the price they want.
We also found that the number of multiple mortgage holders decreased in certain CMAs, including Vancouver, Calgary, Edmonton, Ottawa-Gatineau, Québec City and Halifax. This could suggest that the 2016 mortgage rule change decreased consumers’ ability to fund a second or third mortgage in these CMAs.