According to recent Statistics Canada data, Canadian home owners paid $91.42 billion in mortgage debt payments during the first quarter of the year alone, with more than half going towards interest.
This sum was 2.04% greater than the volume seen during the quarter prior, as well as 7.30% larger on an annual basis.
Interest accounted for a clear majority of the payments, growing by 13.78% year-over-year to reach $51.89 billion during Q1 2019. Better Dwelling stated in its analysis of the numbers that this was the largest that Canadian households have spent on interest since Q4 2014.
“Households are paying record amounts on mortgages, but less is going to principal. The amount that went towards principal reached $39.53 billion in Q1 2019, down 0.39% from the previous quarter. The decline was so large, the principal contribution fell 0.17% year over year. Less principal paid down means carrying a larger balance, and more interest.”
Figures from the Bank of Canada last month indicated that the nation’s mortgage debt balance is growing inexorably, reaching a record high of $1.56 trillion in May despite the annual increase being one of the lowest for that month.
According to the central bank, the overall mortgage debt balance grew by 3.64% year-over-year. This was 22.2% weaker than the annual growth seen during May 2018, and this was “the slowest annual rate of growth for any May in at least 29 years, with the exception of 2001.”
“That one exception saw interest rates cut multiple times to bring back growth,” Better Dwelling noted. “There are a few signs mortgage growth may have bottomed, pending no external pressure. However, the traditional busy season for real estate sales has mostly passed. That could damper the current momentum.”