Mortgage Growth Buckles Under Weight of Rate Hikes in Canada
- Homebuyers sit on sidelines and lenders are growing cautious
- Loan impairments in Canadian units jumped to nearly $1 billion
Homes in Toronto, Ontario.
Photographer: James MacDonald/BloombergThis article is for subscribers only.
The aggressive pace of interest-rate hikes is hitting mortgage books at Canada’s biggest banks, leading to slowing loan growth, longer amortization periods and a rise in impairments.
Higher borrowing costs cut into mortgage growth, with would-be homebuyers sitting on the sidelines. At the country’s five largest lenders, including Royal Bank of Canada and Toronto-Dominion Bank, residential loan growth slowed to 4% in the fiscal third quarter, compared with annual growth of 9.8% a year earlier.