As hot inflation pushes up interest rates and continues to cool Canada’s housing market, analysts expect mortgage growth to dip further this year
lending rose 8 per cent in the year ended Oct. 31, 2022, breaking the trend of double-digit growth in 2020 and 2021 when historically low rates spurred homebuyers and bolstered bank earnings.
Sales volume has spiralled lower, with activity in the Toronto and Vancouver regions plunging 45 per cent and 55 per cent year-over-year respectively in January. Economists broadly expect that the Bank of Canada will hold off on rate cuts until the end of 2023 at the earliest, suggesting that mortgage headwinds won’t ease until next year, according to KBW analyst Mike Rizvanovic.
Between higher rates and tighter approval requirements, the number of people qualifying for mortgages at traditional lenders has plummeted from a year ago, according to Frances Hinojosa, a mortgage broker and co-founder and chief executive of Tribe Financial Group. The pressure is pushing prospective borrowers and those renewing their mortgages to subprime and private lenders with looser lending requirements.
But as homebuyers continue to navigate a housing shortage while Canada ramps up the number of newcomers entering the country, a softer year ahead could be a blip before activity picks up again.
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