Mortgage growth has dropped to its lowest level in 17 years, increasing pressure on the big banks to find business elsewhere, according to a Bloomberg report.
Residential mortgage growth rose by only 3.1% in December from the previous year, the slowest pace since May 2001, and half the growth rate from two years ago, according to the Bank of Canada’s data.
Bank executives have already been conveying expectations of slower growth this year.
Teri Currie, group head of Canadian personal banking at Toronto-Dominion Bank, expects mid-single-digit growth in residential secured lending, which includes amortizing home-equity lines of credit and mortgages. Meanwhile, executives at rival banks expect mortgage growth to be in the low- to mid-single digits.
Steve Belisle, portfolio manager with Manulife Asset Management, said the banks are countering the slowdown in residential lending with growth in business loans, something that makes him a bit uneasy. The “Big Six” had an 11% increase in commercial lending last year.
“The overall loan growth for the banks is actually steady — it has been around 4.5% — and that’s because they are offsetting the slowdown in mortgages with commercial lending, which is low double digits,” Belisle said. “That’s adding risk at the peak of the economic cycle.”
