Borrowing and home-buying activity remains undeterred in Canada, despite monthly payments being much higher than the global standard.
Data from Scotiabank indicated that last June, the nation’s household mortgage credit grew by 5.2% month-over-month. This was its fastest pace in two years, and came amid a noticeable 3.7% increase in the outstanding balance of Canadian mortgage debt, which ended up at $1.57 trillion total.
“Mortgage growth has surely rebounded after a period of deceleration from early-2017 to its mid-2018 trough which was induced by a series of measures aimed at tackling runaway home prices,” Scotiabank economist Juan Manuel Herrera and research analyst Alena Bystrova wrote in their report, as quoted by Livabl.
“Real estate markets continue to adjust to regulatory changes and are now benefitting from a decline in borrowing rates after reaching an eight-year high in late-2018, alongside a tightening spell by the Bank of Canada,” they added.
Compared to the rest of the world, Canadians are actually paying higher-than-normal mortgage rates, only exceeded by a small number of developed nations like the United States and Australia.
A recent analysis by HuffPost Canada has shown that even with fixed-rate terms going for as low as 2.39% in Canada at present, these historic lows are still considerably above a majority of advanced European economies
To compare, the United Kingdom has fixed-rate mortgages with rates as low as 1.65%, and France at 1.39%. Finland has 0.96%, while Germany has 0.5%.
Among the lowest in the world are the fixed-rate products offered by Japan (0.37%), Belgium (0.1%), and Denmark (-0.5%).
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