“The national debt carried by Canadian consumers and the fact that Canada allows foreigners to borrow money for homes and that’s put into our debt [could have a major impact on debt levels],” Derek Austin, an agent with Century 21, told Canadian Real Estate Wealth. “Even 10 foreign borrowers taking out $10 million in mortgages each would throw the numbers out of whack.”
It’s an interesting take on the foreign investment trend and increased debt levels, which have both increasingly made headlines over the past year.
The average national household debt increased 5.1% in April, according to Statistics Canada. Mortgage debt showed the largest growth -- up 6.2%.
And that trend is expected to continue, according to Doug Porter, chief economist for BMO Capital Markets.
“It’s tough to see anything turning this canoe around, as home prices continue to soar in Toronto and Vancouver, while there’s little prospect of a big bounce in personal incomes,” he told the Financial Post.
The impact foreign-owned mortgages have on national debt stats is unknown. Many may argue it has little effect, noting that many foreign buyers pay cash.
However, Austin isn’t so sure.
“The Royal Bank of Canada took away its limits on foreign mortgages,” he said. “Why would they do that if foreigners weren’t taking out mortgages?”
RBC announced in late 2015 that it will no longer limit mortgage size for immigrant buyers in Vancouver.
"We're seeing a lot of affluent newcomers looking to buy high-purchase price homes," Christine Shisler, RBC’s director of multicultural markets, told Reuters at the time. "Now we can actually service any mortgage amount."
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Worries around national average debt numbers are overblown, according to one real estate veteran who argues the stats could be inflated by mortgages held by foreigners.