Canadian reverse mortgage debt growth is slowing down, even as the balance reached a new high in June.
Fresh data from the Office of the Superintendent of Financial Institutions indicated that Canada’s outstanding balance of reverse mortgages has reached a historic peak of $3.74 billion in June.
“This represents an increase of 26.3% compared to the same month last year. That works out to over $778.9 billion in reverse mortgage debt added over the past year,” Better Dwelling explained in its analysis.
However, the real estate information portal emphasized that while the deceleration is clearly apparent, reverse mortgage debt “is still one of the fastest growing segments of debt.”
This development accompanied a similar record high of $302.23 billion in the balance of Canadian HELOC debt. This was a 5.37% increase from June 2018, and the loan type is seeing renewed acceleration in growth.
“The 12-month increase is almost twice the pace of growth seen during the same month last year… [although] the growth rate is still below the peak seen in 2017.”
Majority of these sums secured by real estate went to personal loans, OSFI records revealed. This segment accounted for $269.06 billion of the June volume, 0.19% higher month-over-month and 3.90% larger annually.
“Growth here is higher than usual, but is the lowest seen since March 2017, before the surge of growth,” Better Dwelling stated.
On the other hand, business loans secured by residential real estate had a proportionally much larger 19.12% annual increase, reaching $33.17 billion in June. This was also 1.66% higher than the month before.