Any serious drop in housing prices will be felt for some time to come, warns a federal bank regulator..“A long-term trend towards growing household indebtedness persists and may indicate vulnerability in the Canadian economy and the financial system,” the Superintendent of Financial Institutions — who was quoted in Blacklock’s Reporter — wrote in a 2021 Annual Report tabled in Parliament..“Lenders subject to our supervision hold nearly 80% of all residential mortgages in Canada,” he said, noting mortgage debts are equivalent to 85% of Canada’s entire economy..“Household indebtedness posed the largest risk for many federally-regulated financial institutions,” wrote the superintendent..“COVID-19 created severe pressure on household employment incomes.”.It’s estimated household debts in Canada rose 3.5% from the time the pandemic broke out on March 11, 2020, to December 31, largely due to an increase in mortgage debt..“By the end of the 2020 calendar year accumulated mortgage debt was 85 percent of Canada’s GDP,” said the Annual Budget Report..“This means any significant fall in housing prices could have led to material credit losses for lenders,” said the report..Figures from the Canadian Real Estate Association show from May 2017 average home prices:.increased 2% in St. John’s from $287,000 to $291,500;increased 7% in Winnipeg from $298,000 to $318,200;increased 16% in Québec City from $257,000 to $298,400;increased 21% in Vancouver from $992,000 to $1,199,400;increased 23% in Toronto from $917,000 to $1,128,600;increased 41% in Montréal from $360,000 to $506,800increased 65% in Halifax from $294,000 to $485,642increased 66% in Ottawa from $388,000 to $645,800;increased 75% in Moncton from $166,000 to $291,200;increased 94% in Charlottetown from $188,000 to $365,374..Average home prices declined 17 percent in Regina to $262,800 over the period followed by Edmonton (down 8% to $341,700), Calgary (down 6% to $445,600) and Saskatoon (down 5% to $326,100)..“Even in a substantially more severe risk scenario the resilience of the Canadian financial system would be supported by additional layers of protection,” bank researchers wrote in a 2018 report..The 1982 real estate crash led to the closure of 36 federally-insured loan and trust companies by 1996. Two Alberta banks folded in 1985, the Canadian Commercial and Northland Bank, at a cost of $1.3 billion in federal deposit insurance payouts.
Any serious drop in housing prices will be felt for some time to come, warns a federal bank regulator..“A long-term trend towards growing household indebtedness persists and may indicate vulnerability in the Canadian economy and the financial system,” the Superintendent of Financial Institutions — who was quoted in Blacklock’s Reporter — wrote in a 2021 Annual Report tabled in Parliament..“Lenders subject to our supervision hold nearly 80% of all residential mortgages in Canada,” he said, noting mortgage debts are equivalent to 85% of Canada’s entire economy..“Household indebtedness posed the largest risk for many federally-regulated financial institutions,” wrote the superintendent..“COVID-19 created severe pressure on household employment incomes.”.It’s estimated household debts in Canada rose 3.5% from the time the pandemic broke out on March 11, 2020, to December 31, largely due to an increase in mortgage debt..“By the end of the 2020 calendar year accumulated mortgage debt was 85 percent of Canada’s GDP,” said the Annual Budget Report..“This means any significant fall in housing prices could have led to material credit losses for lenders,” said the report..Figures from the Canadian Real Estate Association show from May 2017 average home prices:.increased 2% in St. John’s from $287,000 to $291,500;increased 7% in Winnipeg from $298,000 to $318,200;increased 16% in Québec City from $257,000 to $298,400;increased 21% in Vancouver from $992,000 to $1,199,400;increased 23% in Toronto from $917,000 to $1,128,600;increased 41% in Montréal from $360,000 to $506,800increased 65% in Halifax from $294,000 to $485,642increased 66% in Ottawa from $388,000 to $645,800;increased 75% in Moncton from $166,000 to $291,200;increased 94% in Charlottetown from $188,000 to $365,374..Average home prices declined 17 percent in Regina to $262,800 over the period followed by Edmonton (down 8% to $341,700), Calgary (down 6% to $445,600) and Saskatoon (down 5% to $326,100)..“Even in a substantially more severe risk scenario the resilience of the Canadian financial system would be supported by additional layers of protection,” bank researchers wrote in a 2018 report..The 1982 real estate crash led to the closure of 36 federally-insured loan and trust companies by 1996. Two Alberta banks folded in 1985, the Canadian Commercial and Northland Bank, at a cost of $1.3 billion in federal deposit insurance payouts.
