Canada’s big banks see mortgage growth slow and even shrink in wake of cooling measures

Submitted on Fri, 05/26/2017 - 10:23

Canadian mortgage growth is slowing as the country’s policy makers step up efforts to cool overheated housing markets in Vancouver and Toronto.

With four of Canada’s biggest banks reporting second-quarter results, the trend shows that growth in home loan portfolios is easing and in some cases shrinking. It’s a welcome sign for Canadian officials struggling to curb residential prices in two of the nation’s largest cities. The federal government tightened mortgage rules and added other measures in October while opening the door to shifting risks of defaulting home loans to lenders.

Toronto-Dominion Bank, Canada’s largest lender by assets, reported Thursday that domestic residential mortgage balances slipped 0.4 per cent to $187.5 billion compared with the prior three-month period, the first contraction in two years. Home loan balances were up 1.2 per cent from the same period last year — the slowest annual growth rate in at least four years.

Toronto-Dominion is seeing the effects of “de-emphasizing” some parts of its mortgage business, including reducing purchases of private-label originations, Chief Financial Officer Riaz Ahmed said in an interview. He also said the country’s residential property market appears to be moderating.

“In the last two weeks of April or so, we did begin to see some cooling in the housing market as sales activity slowed and more supply came to the market,” Ahmed said. “We are happy with that because that’s generally good for Canada and our customers.”


Royal Bank of Canada, which has the biggest share of domestic mortgages, said average home loan balances rose 5.5 per cent to $224.1 billion from a year earlier, its slowest annual growth since the first quarter of 2015. Chief Executive Officer David McKay said he was “encouraged” by April data regarding the Toronto market.