The amount of mortgage debt taken on by Canadians set a fresh record in 2021, eclipsing the previous record set the year before.

Record home price increases over the course of the year translated into record borrowing that amounted to $187.5 billion in new mortgage debt, Statistics Canada reported in its national balance sheet data. That’s well above the previous record of $118.9 billion in 2020 and $79.6 billion in 2019.

In the fourth quarter alone, $46.3 billion in mortgage debt was added, though that was down from the peak of $60.1 billion reported in the second quarter.

Total mortgage debt now stands at $1.95 trillion, while non-mortgage debt makes up another $701 billion.

StatCan’s data confirms that variable mortgage rates continued to be the preferred mortgage product for many borrowers in 2021. The share of mortgage borrowers with a variable rate rose to 28.1 as of the end of the year, up from 18.5% a year earlier.

The value of residential real estate soared $2.5 trillion since 2019

Rapidly rising home prices drove up the total value of residential real estate in Canada to a staggering $8.7 trillion last year. That’s up $1.5 trillion from 2020 and $2.5 trillion higher compared to 2019.

“Since the end of 2020, the value of residential real estate has grown 23.0%, accounting for 65.4% of the increase in household net worth over the same period,” StatsCan said. “Prior to the onset of the global pandemic, annual growth in the value of residential real estate had reached 14.8% at its peak in 2006.”

The value of real estate as a proportion of household disposable income also continued to grow, rising to $562% as of Q4, up from 538% in Q3.

Household savings rate on the decline

While household debt rose, the national savings rate continued to fall from its peak reached at the height of the pandemic.

“Household disposable income was down 1.3% in the fourth quarter, the second consecutive quarterly decline, primarily because of an 11.9% decrease in government transfers to households, while compensation of employees grew 1.9%,” StatsCan reported.

This left households with smaller net savings, resulting in the savings rate falling to 6.4% in Q4. That’s down from 9% in the third quarter and a peak of 27.2% recorded in the second quarter of 2020.

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Last modified: March 15, 2022