The Average Mortgage and HELOC Payment Is Soaring In Toronto and Vancouver

Saturday Aug 11th, 2018

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Canada’s real estate buying spree may be over, but paying off the debt has barely begun. The Canada Mortgage and Housing Corporation (CMHC), the Crown corporation in charge of housing research, teamed up with Equifax to crunch the numbers on the average payment due. Larger debt loans and higher interest rates pushed the average monthly payment for housing much higher in Q1 2018. The large increases are just the beginning as interest rates continue to push towards normalization. Average Mortgage Payments Soar The average mortgage payment is rising quickly in Toronto and Vancouver. Vancouver homeowners had an average payments of $1,794 per month at the end up Q1 2018, up 6.53% from the previous quarter. The average in Toronto reached $1,662 in Q1, up 6.4% from the last quarter. In Montreal, the average payment reached $1,060 in Q1, up 2.51% from the last quarter. Toronto and Vancouver are increasing at nearly double the pace of Montreal.

 

HELOC Payments Soar In Toronto and Vancouver Home equity lines of credit (HELOC) are an increasingly popular form of debt held by Canadians. A HELOC allows homeowners to secure debt with the equity in their home. They then pay the loan back in monthly installments. These are typically variable rate, meaning the interest paid fluctuates with the market. House-rich, cash poor homeowners have been turning to them a lot recently. The size of the average HELOC payment is smaller than a mortgage, but is growing at over twice the speed. HELOC holders in Toronto are making an average monthly payment of $518 in Q1 2018, up 12.85% from the quarter before. Vancouver HELOC holders owed an average monthly payments of $594 in Q1, up 10.82% from the previous quarter. Montreal HELOC holders owed an average monthly payment of $582 in Q1, up 5.82% form the previous quarter. Remember that this is quarter over quarter, not annual increases.

 

Auto Debt Is Quickly Growing, But Nowhere Near Real Estate Debt Auto financing is also rising very quickly in these three cities. The average monthly auto payment in Toronto reached $504 in Q1 2018, up 1.41% from the previous quarter. Vancouver’s average auto payment rose to $562, up 3.12% from the previous quarter. Montreal’s average hit $446, up 1.13% from the previous quarter. It may not look like much compared to the housing debt, but these are huge numbers for quarterly growth.

 

The speed of increase for the average debt payment in Toronto and Vancouver is shocking. The size of household debt is turning small interest rate hikes into huge service costs. As rates continue to rise to normal levels, this has the potential to get a lot worse. Remember, we’re just off of historic lows.

 

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