A Sharp Decline With Canadian Mortgage Borrowing In 2023

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Canada’s real estate slowdown is still trickling through the mortgage market. BoC’s data shows mortgage originations continued to fall in January. The volume of new lending has virtually dropped off a cliff, as higher rates throttle leverage. Sky-high home prices that are falling aren’t exactly providing much buyer incentive either.

Canadian Mortgage Borrowing Has Been Unusually Slow

Canadian mortgage originations were unusually slow as higher rates bite into leverage. The value of new mortgage funds fell 16.1% ($4.0 billion) to $20.7 billion in January. It represents a massive 41.0% (-$26.6 billion) decline when compared to the same month last year. January is normally a relatively boring month, but this is far from a seasonal slowdown typically observed.

Canadian Mortgage Borrowers Are Pulling Back

Month	Canadian Dollars (in billions)
Jan 2013	15.9
Feb 2013	16.1
Mar 2013	18.8
Apr 2013	24.4
May 2013	27.4
Jun 2013	29
Jul 2013	29.2
Aug 2013	26.5
Sep 2013	22
Oct 2013	21.5
Nov 2013	19.4
Dec 2013	17.7
Jan 2014	16.4
Feb 2014	16.4
Mar 2014	18.5
Apr 2014	22.4
May 2014	26.3
Jun 2014	28.4
Jul 2014	28.7
Aug 2014	26.3
Sep 2014	23.4
Oct 2014	25.6
Nov 2014	20.8
Dec 2014	22
Jan 2015	18.6
Feb 2015	20.1
Mar 2015	25.9
Apr 2015	30.2
May 2015	31.5
Jun 2015	37.3
Jul 2015	35.4
Aug 2015	32
Sep 2015	31.5
Oct 2015	32.3
Nov 2015	31.3
Dec 2015	31.8
Jan 2016	25.6
Feb 2016	25.5
Mar 2016	27.6
Apr 2016	31.4
May 2016	34.5
Jun 2016	40.3
Jul 2016	38.3
Aug 2016	37.7
Sep 2016	34.1
Oct 2016	28.8
Nov 2016	32.3
Dec 2016	30
Jan 2017	22.3
Feb 2017	20.1
Mar 2017	26.2
Apr 2017	26.3
May 2017	34.3
Jun 2017	40.6
Jul 2017	42.4
Aug 2017	40.2
Sep 2017	30.9
Oct 2017	30.4
Nov 2017	27.2
Dec 2017	24.8
Jan 2018	27
Feb 2018	25.9
Mar 2018	25.7
Apr 2018	28.6
May 2018	36.9
Jun 2018	40.3
Jul 2018	34.8
Aug 2018	34.8
Sep 2018	27.2
Oct 2018	30.9
Nov 2018	31.4
Dec 2018	24.8
Jan 2019	22.1
Feb 2019	20.4
Mar 2019	23.5
Apr 2019	28.7
May 2019	36.7
Jun 2019	41.1
Jul 2019	45.8
Aug 2019	42.8
Sep 2019	38.5
Oct 2019	40.4
Nov 2019	37.9
Dec 2019	33.3
Jan 2020	30.7
Feb 2020	30.3
Mar 2020	35.8
Apr 2020	41.3
May 2020	39.9
Jun 2020	43.2
Jul 2020	44.5
Aug 2020	46.2
Sep 2020	50.3
Oct 2020	52.9
Nov 2020	49.4
Dec 2020	47.6
Jan 2021	41.1
Feb 2021	41.3
Mar 2021	53.3
Apr 2021	51.4
May 2021	50.7
Jun 2021	58.5
Jul 2021	49.5
Aug 2021	45.3
Sep 2021	40.5
Oct 2021	41.6
Nov 2021	44
Dec 2021	38.7
Jan 2022	35.1
Feb 2022	35.6
Mar 2022	44.3
Apr 2022	43.4
May 2022	45.4
Jun 2022	47.8
Jul 2022	39.4
Aug 2022	34.4
Sep 2022	29
Oct 2022	29.3
Nov 2022	29
Dec 2022	24.7
Jan 2023	20.7

Source: Statistics Canada; Better Dwelling.

Mortgage Borrowing In Canada Dropped More Than 41%

Annual growth highlights just how abrupt this change over the past year has been. The -41.0% decline in January is the sharpest observed in the past 10 years of available lender data. Considering it was the slowest month since 2019, and the weakest January since 2015—it wouldn’t be hard to believe it was the slowest in a generation.

Canada’s Mortgage Originations Have Shown Unusually Slow Growth

Month	Percent
Jan 2014	3.3
Feb 2014	1.9
Mar 2014	-1.4
Apr 2014	-8.5
May 2014	-4.1
Jun 2014	-2
Jul 2014	-1.8
Aug 2014	-1
Sep 2014	6.5
Oct 2014	19.3
Nov 2014	7.2
Dec 2014	24.1
Jan 2015	13.6
Feb 2015	22.7
Mar 2015	39.6
Apr 2015	34.9
May 2015	20
Jun 2015	31.3
Jul 2015	23.4
Aug 2015	21.7
Sep 2015	34.4
Oct 2015	26.1
Nov 2015	50.3
Dec 2015	44.7
Jan 2016	37.6
Feb 2016	27.1
Mar 2016	6.7
Apr 2016	4.1
May 2016	9.3
Jun 2016	8.1
Jul 2016	8.2
Aug 2016	17.8
Sep 2016	8.4
Oct 2016	-10.7
Nov 2016	3.2
Dec 2016	-5.7
Jan 2017	-12.9
Feb 2017	-21.3
Mar 2017	-5.2
Apr 2017	-16.3
May 2017	-0.5
Jun 2017	0.8
Jul 2017	10.9
Aug 2017	6.7
Sep 2017	-9.4
Oct 2017	5.4
Nov 2017	-16
Dec 2017	-17.3
Jan 2018	20.9
Feb 2018	29
Mar 2018	-1.8
Apr 2018	8.8
May 2018	7.7
Jun 2018	-0.8
Jul 2018	-17.9
Aug 2018	-13.5
Sep 2018	-12.2
Oct 2018	1.7
Nov 2018	15.6
Dec 2018	-0.2
Jan 2019	-18.1
Feb 2019	-21
Mar 2019	-8.7
Apr 2019	0.4
May 2019	-0.6
Jun 2019	1.9
Jul 2019	31.4
Aug 2019	23.1
Sep 2019	41.6
Oct 2019	30.7
Nov 2019	20.8
Dec 2019	34.6
Jan 2020	38.8
Feb 2020	48.3
Mar 2020	52.6
Apr 2020	43.9
May 2020	8.6
Jun 2020	5.1
Jul 2020	-2.9
Aug 2020	7.8
Sep 2020	30.9
Oct 2020	30.8
Nov 2020	30.2
Dec 2020	42.9
Jan 2021	33.8
Feb 2021	36.2
Mar 2021	48.7
Apr 2021	24.5
May 2021	27
Jun 2021	35.4
Jul 2021	11.3
Aug 2021	-1.8
Sep 2021	-19.6
Oct 2021	-21.3
Nov 2021	-10.9
Dec 2021	-18.7
Jan 2022	-14.4
Feb 2022	-13.7
Mar 2022	-16.9
Apr 2022	-15.5
May 2022	-10.3
Jun 2022	-18.3
Jul 2022	-20.4
Aug 2022	-24.1
Sep 2022	-28.3
Oct 2022	-29.5
Nov 2022	-34.2
Dec 2022	-36.3
Jan 2023	-41

Source: Statistics Canada; Better Dwelling.

When originations are this low a reversal on the horizon relatively soon is expected. An abrupt decline in purchasing without an impacted labor market tends to mean delayed buyers, not ones that have changed their mind. Without prices falling sharply from here or the labor market shifting, a bounce of some sort is expected.